SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 
 (Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2014

OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to

Commission File No. 001-32331

ALPHA NATURAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
42-1638663
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
 
 
One Alpha Place, P.O. Box 16429, Bristol, Virginia
 
24209
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
(276) 619-4410

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. x Yes   ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes   ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
x Large accelerated filer
o Accelerated filer
o Non-accelerated filer
o Smaller reporting company
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes   x   No

Number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of July 31, 2014 - 221,449,911


TABLE OF CONTENTS
 
 
 
 
 
 
 



Table of Contents



Item 1.
Financial Statements

ALPHA NATURAL RESOURCES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except share and per share data)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Coal revenues
$
919,253

 
$
1,123,176

 
$
1,872,073

 
$
2,263,565

Freight and handling revenues
116,338

 
155,218

 
250,540

 
312,385

Other revenues
18,507

 
56,729

 
43,258

 
92,764

Total revenues
1,054,098

 
1,335,123

 
2,165,871

 
2,668,714

Costs and expenses:
 
 
 
 
 
 
 
Cost of coal sales (exclusive of items shown separately below)
827,948

 
1,081,494

 
1,724,532

 
2,093,335

Freight and handling costs
116,338

 
155,218

 
250,540

 
312,385

Other expenses
6,691

 
27,782

 
21,885

 
34,781

Depreciation, depletion and amortization
191,072

 
214,716

 
391,367

 
453,729

Amortization of acquired intangibles, net
9,464

 
3,591

 
18,743

 
(1,840
)
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)
43,757

 
38,139

 
84,954

 
81,765

Asset impairment and restructuring
2,590

 
11,265

 
12,089

 
22,341

Goodwill impairment
308,651

 
—

 
308,651

 
—

Total costs and expenses
1,506,511

 
1,532,205

 
2,812,761

 
2,996,496

Loss from operations
(452,413
)
 
(197,082
)
 
(646,890
)
 
(327,782
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(71,012
)
 
(60,953
)
 
(135,974
)
 
(120,354
)
Interest income
540

 
1,099

 
1,156

 
2,125

Loss on early extinguishment of debt
(218
)
 
(33,197
)
 
(2,022
)
 
(33,197
)
Gain on exchange of equity method investment
—

 
—

 
250,331

 
—

Miscellaneous income, net
958

 
14,925

 
2,114

 
16,854

Total other income (expense), net
(69,732
)
 
(78,126
)
 
115,605

 
(134,572
)
Loss before income taxes
(522,145
)
 
(275,208
)
 
(531,285
)
 
(462,354
)
Income tax (expense) benefit
9,518

 
89,527

 
(37,040
)
 
165,885

Net loss
$
(512,627
)
 
$
(185,681
)
 
$
(568,325
)
 
$
(296,469
)
Basic loss per common share
$
(2.32
)
 
$
(0.84
)
 
$
(2.57
)
 
$
(1.34
)
Diluted loss per common share
$
(2.32
)
 
$
(0.84
)
 
$
(2.57
)
 
$
(1.34
)
Weighted average shares - basic
221,376,721

 
220,840,989

 
221,266,066

 
220,791,668

Weighted average shares - diluted
221,376,721

 
220,840,989

 
221,266,066

 
220,791,668


See accompanying Notes to Condensed Consolidated Financial Statements.


1
Table of Contents

ALPHA NATURAL RESOURCES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(Amounts in thousands)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Net loss
$
(512,627
)
 
$
(185,681
)
 
$
(568,325
)
 
$
(296,469
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Amortization of and adjustments to employee benefit costs, net of income tax of $2,814 and ($4,472), and $3,158 and ($4,286) for the three and six months ended June 30, 2014 and 2013, respectively
(4,162
)
 
8,443

 
(4,716
)
 
9,176

Settlement of cash flow hedges, net of income tax of $439 and $2,728, and $1,038 and $1,787 for the three and six months ended June 30, 2014 and 2013, respectively
(667
)
 
(4,656
)
 
(1,577
)
 
(3,051
)
Change in fair value of marketable securities, net of income tax of ($15,353) and $140, and ($35,707) and $200 for the three and six months ended June 30, 2014 and 2013, respectively
23,320

 
(239
)
 
54,235

 
(340
)
Total other comprehensive income, net of tax
18,491

 
3,548

 
47,942

 
5,785

Total comprehensive loss
$
(494,136
)
 
$
(182,133
)
 
$
(520,383
)
 
$
(290,684
)

See accompanying Notes to Condensed Consolidated Financial Statements.

2
Table of Contents

ALPHA NATURAL RESOURCES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
 
June 30,
2014
 
December 31,
2013
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
768,501

 
$
619,644

Trade accounts receivable, net
307,277

 
287,655

Inventories, net
315,061

 
304,863

Short-term marketable securities
369,950

 
337,069

Prepaid expenses and other current assets
277,501

 
439,193

Total current assets
2,038,290

 
1,988,424

Property, equipment and mine development costs, net
1,601,687

 
1,798,648

Owned and leased mineral rights and land (net of accumulated depletion of $1,287,477 and $1,167,912, respectively)
7,038,333

 
7,157,506

Goodwill, net
—

 
308,651

Other acquired intangibles (net of accumulated amortization of $348,068 and $422,737, respectively)
127,819

 
158,465

Other non-current assets
615,005

 
387,564

Total assets
$
11,421,134

 
$
11,799,258

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
69,686

 
$
29,169

Trade accounts payable
261,279

 
234,951

Accrued expenses and other current liabilities
640,354

 
978,695

Total current liabilities
971,319

 
1,242,815

Long-term debt
3,820,483

 
3,398,434

Pension and postretirement medical benefit obligations
1,005,614

 
990,124

Asset retirement obligations
726,391

 
728,575

Deferred income taxes
899,438

 
901,552

Other non-current liabilities
435,570

 
465,892

Total liabilities
7,858,815

 
7,727,392

 
 
 
 
Commitments and Contingencies (Note 18)
 
 
 
Stockholders’ Equity
 
 
 
Preferred stock - par value $0.01, 10.0 million shares authorized, none issued
—

 
—

Common stock - par value $0.01, 400.0 million shares authorized, 233.5 million issued and 221.4 million outstanding at June 30, 2014 and 232.8 million issued and 221.0 million outstanding at December 31, 2013
2,335

 
2,328

Additional paid-in capital
8,197,213

 
8,185,222

Accumulated other comprehensive income (loss)
(9,206
)
 
(57,148
)
Treasury stock, at cost: 12.1 million and 11.8 million shares at June 30, 2014 and December 31, 2013, respectively
(272,899
)
 
(271,737
)
Accumulated deficit
(4,355,124
)
 
(3,786,799
)
Total stockholders’ equity
3,562,319

 
4,071,866

Total liabilities and stockholders’ equity
$
11,421,134

 
$
11,799,258


See accompanying Notes to Condensed Consolidated Financial Statements.

3
Table of Contents

ALPHA NATURAL RESOURCES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
 
Six Months Ended
June 30,
 
2014
 
2013
Operating activities:
 
 
 
Net loss
$
(568,325
)
 
$
(296,469
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depreciation, depletion, accretion and amortization
447,802

 
509,171

Amortization of acquired intangibles, net
18,743

 
(1,840
)
Mark-to-market adjustments for derivatives
(4,010
)
 
1,500

Stock-based compensation
11,997

 
12,598

Goodwill impairment
308,651

 
—

Asset impairment and restructuring
12,089

 
22,341

Employee benefit plans, net
28,047

 
29,481

Loss on early extinguishment of debt
2,022

 
33,197

Gain on exchange of equity-method investment
(250,331
)
 
—

Deferred income taxes
41,761

 
(167,320
)
Other, net
8,980

 
(8,575
)
Changes in operating assets and liabilities:
 
 
 
Trade accounts receivable, net
(19,622
)
 
31,672

Inventories, net
(10,198
)
 
15,047

Prepaid expenses and other current assets
76,102

 
19,418

Other non-current assets
8,145

 
6,970

Trade accounts payable
28,242

 
3,994

Accrued expenses and other current liabilities
(345,589
)
 
14,422

Pension and postretirement medical benefit obligations
(18,549
)
 
(26,783
)
Asset retirement obligations
(25,989
)
 
(20,352
)
Other non-current liabilities
(20,977
)
 
(110,976
)
Net cash provided by (used in) operating activities
(271,009
)
 
67,496

Investing activities:
 
 
 
Capital expenditures
(82,833
)
 
(107,006
)
Purchases of marketable securities
(333,497
)
 
(469,443
)
Sales of marketable securities
298,180

 
296,062

Proceeds from exchange of equity-method investment, net
96,732

 
—

Other, net
3,271

 
5,150

Net cash used in investing activities
(18,147
)
 
(275,237
)
Financing activities:
 
 
 
Principal repayments of long-term debt
(34,431
)
 
(940,927
)
Principal repayments of capital lease obligations
(8,574
)
 
(7,689
)
Proceeds from borrowings on long-term debt
500,000

 
964,369

Debt issuance and modification costs
(16,494
)
 
(24,236
)
Common stock repurchases
(1,162
)
 
(1,236
)
Other
(1,326
)
 
(1,300
)
Net cash provided by (used in) financing activities
438,013

 
(11,019
)
Net increase (decrease) in cash and cash equivalents
148,857

 
(218,760
)
Cash and cash equivalents at beginning of period
619,644

 
730,723

Cash and cash equivalents at end of period
$
768,501

 
$
511,963


See accompanying Notes to Condensed Consolidated Financial Statements.

4
Table of Contents

ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

(1)
Business and Basis of Presentation

Business

Alpha Natural Resources, Inc. and its consolidated subsidiaries (the “Company” and “Alpha”) are primarily engaged in the business of extracting, processing and marketing steam and metallurgical coal from surface and deep mines, and mainly sell to electric utilities, steel and coke producers, and industrial customers. The Company, through its subsidiaries, is also involved in marketing coal produced by others to supplement its own production and, through blending, provides its customers with coal qualities beyond those available from its own production.

Basis of Presentation

The accompanying interim Condensed Consolidated Financial Statements of the Company are unaudited and prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for Form 10-Q. Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America as long as the financial statements are not misleading. In the opinion of management, these interim Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or any other period. These interim Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2014.

The Company’s Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Company’s Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include inventories; mineral reserves; allowance for non-recoupable advanced mining royalties; asset impairments; reclamation obligations; pensions, postemployment, postretirement medical and other employee benefit obligations; useful lives for depreciation, reserves for workers’ compensation and black lung claims; current and deferred income taxes; reserves for contingencies and litigation and fair value of financial instruments. Estimates are based on facts and circumstances believed to be reasonable at the time; however, actual results could differ from those estimates.

New Accounting Pronouncements

On April 10, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which changes the criteria for reporting discontinued operations and requires additional disclosures about discontinued operations. The standard requires that an entity report as a discontinued operation only a disposal that represents a strategic shift in operations that has a major effect on its operations and financial results. ASU 2014-08 is effective prospectively for new disposals that occur within annual periods beginning on or after December 15, 2014. Early adoption is permitted and the Company adopted ASU 2014-08 during the three months ended June 30, 2014. Adoption of the standard did not have a material impact on the Company's results of operations.
On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.  

Reclassifications


5
Table of Contents

Certain reclassifications have been made to the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2013 to conform to the current year presentation.

(2)    Asset Impairment and Restructuring

The Company recorded severance expenses of $1,664 and $2,398, and impairment expenses of $926 and $9,723 related to certain other non-current assets within the Company’s All Other category during the three and six months ended June 30, 2014, respectively. Additionally, the Company recorded other expenses of ($32) during the six months ended June 30, 2014.

The Company recorded severance expenses of $5,974 and $13,047 and professional fees and other expenses of $5,291 and $9,294 for the three and six months ended June 30, 2013, respectively.

(3)    Goodwill, Net
During the three months ended June 30, 2014, the Company performed an interim goodwill impairment test due primarily to continued weakness in the global metallurgical coal markets which indicated that the fair value of a reporting unit within its eastern coal operations may have been below its carrying value.

The Company performed its interim goodwill impairment test using a two-step approach. Step one compared the fair value of a reporting unit to its carrying value. The valuation methodology utilized to estimate the fair value of the reporting unit was based on both a market and income approach and is within the range of fair values yielded under each approach. The income approach is based on a discounted cash flow methodology in which expected future net cash flows are discounted to present value, using an appropriate after-tax weighted average cost of capital. The market approach is based on a guideline company and similar transaction method. Under the guideline company method, certain operating metrics from a selected group of publicly traded guideline companies that have similar operations to the Company’s reporting unit are used to estimate the fair value of the reporting unit. Under the similar transaction method, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting unit are used to estimate the fair value of the Company’s reporting unit.
 
In step two of the goodwill impairment test, the Company compared the carrying value of goodwill to its implied fair value. In estimating the implied fair value of goodwill at a reporting unit, the Company assigned the fair value of the reporting unit to all of the assets and liabilities associated with the reporting unit as if the reporting unit had been acquired in a business combination.

As a result of applying the approach discussed above at its interim impairment testing date of June 1, 2014, the Company recorded an impairment charge to write down goodwill to its implied fair value as follows:
 
Balance December 31, 2013
 
 Impairments
 
Balance June 30, 2014
Goodwill:
 
 
 
 
 
Eastern operations
$
3,024,308

 
$
—

 
$
3,024,308

 
 
 
 
 
 
Accumulated impairment losses:
 
 
 
 
 
Eastern operations
$
(2,715,657
)
 
$
(308,651
)
 
$
(3,024,308
)
 
 
 
 
 
 
Goodwill, net:
 
 
 
 
 
Eastern operations
$
308,651

 
$
(308,651
)
 
$
—



6
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

(4)    Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes to accumulated other comprehensive income (loss) during the six months ended June 30, 2014 and 2013:

Balance December 31, 2013
 
Other comprehensive
income (loss) before reclassifications
 
Amounts reclassified
from accumulated other comprehensive income (loss)
 
Balance
June 30, 2014
Employee benefit costs
$
(59,102
)
 
$
(3,603
)
 
$
(1,113
)
 
$
(63,818
)
Cash flow hedges
1,941

 
—

 
(1,577
)
 
364

Available-for-sale marketable securities
13

 
54,236

 
(1
)
 
54,248


$
(57,148
)
 
$
50,633

 
$
(2,691
)
 
$
(9,206
)

 
Balance December 31, 2012
 
Other comprehensive
income (loss) before reclassifications
 
Amounts reclassified
from accumulated other comprehensive income (loss)
 
Balance
June 30, 2013
Employee benefit costs
$
(171,394
)
 
$
8,061

 
$
1,115

 
$
(162,218
)
Cash flow hedges
4,755

 
(1,007
)
 
(2,044
)
 
1,704

Available-for-sale marketable securities
41

 
(328
)
 
(12
)
 
(299
)
 
$
(166,598
)
 
$
6,726

 
$
(941
)
 
$
(160,813
)

The following tables summarize the amounts reclassified from accumulated other comprehensive income (loss) and the statement of operations line items affected by the reclassification during the three and six months ended June 30, 2014 and 2013:


7
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

Details about accumulated other comprehensive income (loss) components
Amounts reclassified from accumulated other comprehensive income (loss)
 
Affected line item in the Condensed Consolidated Statements of Operations
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2013
 
 
 
Employee benefit costs:
 
 
 
 
 
     Amortization of actuarial loss
$
35

 
$
2,058

 
(1) 
     Amortization of prior service credit
(939
)
 
(955
)
 
(1) 
     Other
—

 
58

 
(1) 
Total before income tax
(904
)
 
1,161

 
 
Tax (expense) benefit
345

 
(408
)
 
Income tax (expense) benefit
Total, net of tax
$
(559
)
 
$
753

 
 
 
 
 
 
 
 
Cash flow hedges:


 
 
 

     Commodity swaps-coal
$
(1,087
)
 
$
(608
)
 
Coal revenues
     Commodity swaps-diesel fuel
(19
)
 
1,082

 
Cost of coal sales
     Commodity swaps-natural gas
—

 
(1,226
)
 
Other revenues
     Commodity options-natural gas
—

 
129

 
Other revenues
Total before income tax
(1,106
)
 
(623
)
 

Tax benefit
439

 
230

 
Income tax (expense) benefit
Total, net of tax
$
(667
)
 
$
(393
)
 



 
 
 

Available-for-sale marketable securities:


 
 
 

     Unrealized gains and losses
$
—

 
$
(13
)
 
Interest income
Tax benefit
—

 
5

 
Income tax (expense) benefit
Total, net of tax
$
—

 
$
(8
)
 



8
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

Details about accumulated other comprehensive income (loss) components
Amounts reclassified from accumulated other comprehensive income (loss)
 
Affected line item in the Condensed Consolidated Statements of Operations
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2013
 
 
 
Employee benefit costs:
 
 
 
 
 
     Amortization of actuarial loss
$
92

 
$
3,586

 
(1) 
     Amortization of prior service credit
(1,894
)
 
(1,909
)
 
(1) 
     Other
—

 
58

 
(1) 
Total before income tax
(1,802
)
 
1,735

 
 
Tax (expense) benefit
689

 
(620
)
 
Income tax (expense) benefit
Total, net of tax
$
(1,113
)
 
$
1,115

 
 
 
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
     Commodity swaps-coal
$
(2,240
)
 
$
(1,790
)
 
Coal revenues
     Commodity swaps-diesel fuel
(376
)
 
302

 
Cost of coal sales
     Commodity swaps-natural gas
—

 
(1,866
)
 
Other revenues
     Commodity options-natural gas
—

 
113

 
Other revenues
Total before income tax
(2,616
)
 
(3,241
)
 
 
Tax benefit
1,039

 
1,197

 
Income tax (expense) benefit
Total, net of tax
$
(1,577
)
 
$
(2,044
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale marketable securities:
 
 
 
 
 
     Unrealized gains and losses
$
(1
)
 
$
(20
)
 
Interest income
Tax benefit
—

 
8

 
Income tax (expense) benefit
Total, net of tax
$
(1
)
 
$
(12
)
 
 

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs for pension, other postretirement benefit plans and black lung. See Note 16.

(5)    Earnings Per Share

The number of shares used to calculate basic earnings per common share is based on the weighted average number of the Company’s outstanding common shares during the respective periods. The number of shares used to calculate diluted earnings per common share is based on the number of common shares used to calculate basic earnings per share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during each period, the Company’s outstanding 4.875% convertible senior notes due 2020 (the “4.875% Convertible Notes”), 3.75% convertible senior notes due 2017 (the “3.75% Convertible Notes”), 2.375% convertible senior notes due 2015 (the “2.375% Convertible Notes”), and 3.25% convertible senior notes due 2015 issued by Alpha Appalachia Holdings, Inc. (the “3.25% Convertible Notes”). The 4.875% Convertible Notes, 3.75% Convertible Notes, 2.375% Convertible Notes and 3.25% Convertible Notes become dilutive for earnings per common share calculations in certain circumstances and in specified periods. The shares that would be issued to settle the conversion spread are included in the diluted earnings per common share calculation when the conversion option is in the money. In periods of net loss, the number of shares used to calculate diluted earnings per share is the same as basic earnings per share.

(6)    Inventories, net

Inventories, net consisted of the following:

9
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
June 30,
2014
 
December 31,
2013
Raw coal
$
46,637

 
$
39,830

Saleable coal
184,354

 
171,240

Materials, supplies and other, net
84,070

 
93,793

Total inventories, net
$
315,061

 
$
304,863


(7)    Marketable Securities

In 2010, the Company entered into a 50/50 joint venture (the “Alpha Shale JV”) with Rice Drilling C LLC, a wholly owned subsidiary of Rice Drilling B LLC, in order to develop a portion of Alpha’s Marcellus Shale natural gas holdings in southwest Pennsylvania. On December 6, 2013, the Company, Rice Drilling C LLC and Rice Energy Inc. (“Rice Energy”) entered into a transaction agreement (the “Transaction Agreement”). Pursuant to the Transaction Agreement, the Company agreed to transfer its 50% interest in the Alpha Shale JV to Rice Energy in exchange for total consideration of $300,000, consisting of $100,000 of cash and $200,000 of shares of Rice Energy common stock, based upon Rice Energy’s initial public offering (the “Offering”). On January 29, 2014, Rice Energy completed the Offering, and on the same date, issued the Company 9,523,810 shares of common stock and paid $100,000 in cash. The shares of Rice Energy were subject to customary lockup provisions which expired on July 22, 2014. The exchange of interest in Alpha Shale resulted in a gain of $250,331 in the six months ended June 30, 2014. The Rice Energy common stock is accounted for as an available for sale marketable security and reported within other non-current assets on the Condensed Consolidated Balance Sheet as of June 30, 2014.

Short-term marketable securities consisted of the following:
 
June 30, 2014
 
 
 
Unrealized
 
 
 
Cost
 
Gain
 
Loss
 
Fair value
Short-term marketable securities:
 
 
 
 
 
 
 
U.S. treasury and agency securities(a)
$
82,891

 
$
7

 
$
(4
)
 
$
82,894

Corporate debt securities(a)
287,098

 
15

 
(57
)
 
287,056

Total short-term marketable securities
$
369,989

 
$
22

 
$
(61
)
 
$
369,950

 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
Unrealized
 
 
 
Cost
 
Gain
 
Loss
 
Fair value
Short-term marketable securities:
 
 
 
 
 
 
 
U.S. treasury and agency securities(a)
$
81,484

 
$
17

 
$
(4
)
 
$
81,497

Corporate debt securities(a)
255,567

 
49

 
(44
)
 
255,572

Total short-term marketable securities
$
337,051

 
$
66

 
$
(48
)
 
$
337,069

(a) 
Unrealized gains and losses are recorded as a component of stockholders’ equity.

Long-term marketable securities included in other non-current assets, consisted of the following:

10
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
June 30, 2014
 
 
 
Unrealized
 
 
 
Cost
 
Gain
 
Loss
 
Fair value
Long-term marketable securities:
 
 
 
 
 
 
 
Corporate equity securities (a)
$
200,000

 
$
90,000

 
$
—

 
$
290,000

Mutual funds held in Rabbi Trust(b)
7,319

 
4,340

 
(1,774
)
 
9,885

Total long-term marketable securities
$
207,319

 
$
94,340

 
$
(1,774
)
 
$
299,885

 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
Unrealized
 
 
 
Cost
 
Gain
 
Loss
 
Fair value
Long-term marketable securities:
 
 
 
 
 
 
 
Mutual funds held in rabbi trust(b)
$
7,261

 
$
3,637

 
$
(1,568
)
 
$
9,330

(a) 
Unrealized gains and losses are recorded as a component of stockholders’ equity.
(b) 
Unrealized gains and losses are recorded in current period earnings.

(8)     Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:
 
June 30, 2014
 
December 31, 2013
Prepaid insurance
$
17,343

 
$
12,273

Insurance and indemnification receivables (1)
123,657

 
195,228

Notes and other receivables
15,110

 
10,381

Deferred income taxes - current
43,371

 
118,757

Deferred long wall move expenses
13,589

 
10,766

Refundable income taxes
10,185

 
19,708

Derivative financial instruments
7,686

 
8,898

Prepaid freight
22,853

 
26,445

Deposits
9,066

 
13,671

Other prepaid expenses
14,641

 
23,066

Total prepaid expenses and other current assets
$
277,501

 
$
439,193

(1) See Note 10.

(9)    Property, Equipment and Mine Development Costs

Property, equipment and mine development costs consisted of the following:

 
June 30, 2014
 
December 31, 2013
Plant and mining equipment
$
3,656,137

 
$
3,731,282

Mine development
313,726

 
299,334

Office equipment, software and other
50,086

 
61,000

Construction in progress
54,040

 
62,457

Total property, equipment and mine development costs
4,073,989

 
4,154,073

Less accumulated depreciation and amortization
2,472,302

 
2,355,425

Total property, equipment and mine development costs, net
$
1,601,687

 
$
1,798,648


11
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)


(10)     Accrued Expenses and Other Current Liabilities
 
Accrued expenses and other current liabilities consisted of the following:
 
June 30, 2014
 
December 31, 2013
Wages and employee benefits
$
92,389

 
$
117,561

Current portion of asset retirement obligations
77,389

 
70,851

Taxes other than income taxes
109,610

 
123,361

Freight
10,607

 
4,650

Current portion of self insured workers’ compensation obligations
14,189

 
14,189

Interest payable
26,627

 
22,321

Current portion of postretirement medical benefit obligations
46,673

 
46,678

Deferred revenue
40,494

 
41,250

Litigation (1)
159,329

 
447,214

Other
63,047

 
90,620

Total accrued expenses and other current liabilities
$
640,354

 
$
978,695

(1) The Company has recorded related receivables of $123,657 and $195,228 from insurance coverage and indemnifications in prepaid expenses and other current assets as of June 30, 2014 and December 31, 2013, respectively.
 
(11)    Long-Term Debt

Long-term debt consisted of the following:
 
June 30, 2014
 
December 31, 2013
6.25% senior notes due 2021
$
700,000

 
$
700,000

7.50% senior secured second lien notes due 2020
500,000

 
—

6.00% senior notes due 2019
800,000

 
800,000

9.75% senior notes due 2018
500,000

 
500,000

Term loan due 2020
617,188

 
620,313

4.875% convertible senior notes due 2020
345,000

 
345,000

3.75% convertible senior notes due 2017
345,000

 
345,000

3.25% convertible senior notes due 2015
109,201

 
128,182

2.375% convertible senior notes due 2015
44,458

 
65,889

Other
64,179

 
73,305

Debt discount
(134,857
)
 
(150,086
)
Total long-term debt
3,890,169

 
3,427,603

Less current portion
(69,686
)
 
(29,169
)
Long-term debt, net of current portion
$
3,820,483

 
$
3,398,434


Repurchases of 2.375% and 3.25% Convertible Senior Notes due 2015

During the three and six months ended June 30, 2014, the Company completed the repurchase of approximately $2,832 and $21,431, respectively, of its outstanding 2.375% Convertible Notes and approximately $2,930 and $18,981, respectively, of its outstanding 3.25% Convertible Notes and recorded a loss on early extinguishment of debt of $218 and $2,022, respectively.

Amendment No. 2 to the Fourth Amended and Restated Credit Agreement

12
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

On May 7, 2014, the Company entered into an amendment (“Amendment No. 2”) to the Fourth Amended and Restated Credit Agreement dated as of May 22, 2013, which was amended on October 2, 2013 by Amendment No. 1 thereto, (as amended, the “Credit Agreement”) with the lenders party thereto, the issuing banks party thereto, Citicorp North America, Inc., as administrative agent and as collateral agent, and all other parties thereto from time to time.  The principal changes to the Credit Agreement effected by the Amendment No. 2 to the Fourth Amended and Restated Credit Agreement include the following: suspending the interest coverage ratio until the first quarter of 2016, replacing the senior secured leverage ratio with a first lien senior secured leverage ratio, reducing the size of the restricted payment basket, extending the minimum liquidity covenant through the end of 2015, increasing by $400,000 the amount of additional debt permitted to be incurred either pursuant to the “accordion” feature of the Credit Agreement or a notes offering, and requiring the first $800,000 of additional debt incurred pursuant to the accordion or a notes offering (including the debt represented by the 7.50% senior secured second lien notes due 2020 issued in May 2014) to be unsecured debt or second lien secured debt.

The terms of the Credit Agreement (i) restrict the ability of the Company and its subsidiaries to make investments, loans and acquisitions, incur additional indebtedness, and pay dividends on its capital stock or redeem, repurchase or retire its capital stock; and (ii) require the Company to provide additional collateral consisting of receivables to secure the obligations under the Credit Agreement when not used to secure a permitted receivables facility.

Indenture and New Senior Secured Second Lien Notes

On May 20, 2014, Alpha, certain of Alpha’s wholly owned domestic subsidiaries, as guarantors (collectively, the “Guarantors”), and Wilmington Trust, National Association (“Wilmington Trust”), as trustee, entered into an indenture (the “Indenture”) governing Alpha’s newly issued 7.50% senior secured second lien notes due 2020 (the “New Secured Notes”). The New Secured Notes will pay interest semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2015, at a rate of 7.50% per year, and will mature on August 1, 2020.

The New Secured Notes are guaranteed by each of Alpha’s current and future wholly owned domestic subsidiaries that guarantee Alpha’s obligations under the Credit Agreement. The New Secured Notes are Alpha’s senior secured obligations, ranking equal in right of payment with all of Alpha’s existing and future indebtedness that is not subordinated in right of payment to the New Secured Notes; secured by a second priority lien on Alpha’s assets that secure Alpha’s indebtedness under the Credit Agreement, and thus effectively junior to Alpha’s indebtedness that is permitted to be secured by first priority liens on the collateral securing the New Secured Notes, including indebtedness under the Credit Agreement, and to indebtedness secured by assets that are not part of the collateral securing the New Secured Notes, in each case to the extent of the value of the assets securing such indebtedness; senior in right of payment to all of Alpha’s future debt that is subordinated in right of payment to the New Secured Notes; and structurally subordinated to any existing and future indebtedness and other liabilities of any non-guarantor subsidiary.
    
Alpha may redeem the New Secured Notes, in whole or in part, at any time prior to August 1, 2016, at a price equal to 100% of the aggregate principal amount of the New Secured Notes plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. In addition, Alpha may redeem up to 35% of the aggregate principal amount of the New Secured Notes with the net cash proceeds from certain equity offerings, at any time prior to August 1, 2016 at a redemption price equal to 107.5% of the aggregate principal amount of the New Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date if at least 65% of the aggregate principal amount of New Secured Notes issued under the Indenture remains outstanding after the redemption. Alpha may also redeem the New Secured Notes, in whole or in part, at any time on or after August 1, 2016, at the redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.

Upon the occurrence of a change of control repurchase event with respect to the New Secured Notes, unless Alpha has exercised its right to redeem the New Secured Notes, Alpha will be required to offer to repurchase each holder’s New Secured Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The Indenture contains covenants that limit, among other things, Alpha’s ability to:

•
incur, or permit its subsidiaries to incur, additional debt;
•
issue, or permit its subsidiaries to issue, certain types of stock;
•
pay dividends on its or its subsidiaries’ capital stock or repurchase its capital stock;

13
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

•
make certain investments;
•
enter into certain types of transactions with affiliates;
•
incur liens on certain assets to secure debt;
•
limit dividends or other payments by its restricted subsidiaries to it and its other restricted subsidiaries;
•
consolidate, merge or sell all or substantially all of its assets; and
•
make certain payments on its or its subsidiaries’ subordinated debt.

These covenants are subject to a number of important qualifications and exceptions. These covenants may not apply at any time after the New Secured Notes are assigned a credit grade rating of at least BB+ (stable) from Standard & Poor’s Ratings Services and of at least Ba1 (stable) from Moody’s Investors Service, Inc.

As of June 30, 2014, the carrying value of the New Secured Notes was $500,000.

(12)    Asset Retirement Obligations

The following table summarizes the changes in asset retirement obligations for the six months ended June 30, 2014:
Total asset retirement obligations at December 31, 2013
$
799,426

Accretion for the period
28,184

Revisions in estimated cash flows
2,159

Expenditures for the period
(25,989
)
Total asset retirement obligations at June 30, 2014
$
803,780

Less current portion
(77,389
)
Long-term portion
$
726,391


(13)    Fair Value of Financial Instruments and Fair Value Measurements

The estimated fair values of financial instruments are determined based on relevant market information. These estimates involve uncertainty and cannot be determined with precision.

The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, trade accounts payable, and accrued expenses and other current liabilities approximate fair value due to the short maturity of these instruments.

The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of June 30, 2014 and December 31, 2013, respectively.


14
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)


June 30, 2014

Carrying
Amount
 
Total Fair
Value
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
6.25% senior notes due 2021
$
700,000

 
$
500,885

 
$
500,885

 
$
—

 
$
—

7.50% senior secured second lien notes due 2020
500,000

 
486,250

 
486,250

 
—

 
—

6.00% senior notes due 2019
800,000

 
583,200

 
583,200

 
—

 
—

9.75% senior notes due 2018(1)
497,186

 
455,000

 
455,000

 
—

 
—

Term loan due 2020(2)
614,558

 
605,689

 
—

 
605,689

 
—

4.875% convertible senior notes due 2020(3)
268,483

 
268,669

 
268,669

 
—

 
—

3.75% convertible senior notes due 2017(4)
296,170

 
295,838

 
295,838

 
—

 
—

3.25% convertible senior notes due 2015(5)
107,409

 
109,720

 
109,720

 
—

 
—

2.375% convertible senior notes due 2015(6)
42,184

 
44,013

 
44,013

 
—

 
—

Total long-term debt
$
3,825,990

 
$
3,349,264

 
$
2,743,575

 
$
605,689

 
$
—



December 31, 2013

Carrying
Amount
 
Total Fair
Value
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
6.25% senior notes due 2021
$
700,000

 
$
602,000

 
$
602,000

 
$
—

 
$
—

6.00% senior notes due 2019
800,000

 
694,872

 
694,872

 
—

 
—

9.75% senior notes due 2018(1)
496,547

 
560,250

 
560,250

 
—

 
—

Term loan due 2020(2)
617,460

 
617,291

 
—

 
617,291

 
—

4.875% convertible senior notes due 2020(3)
264,283

 
372,606

 
372,606

 
—

 
—

3.75% convertible senior notes due 2017(4)
290,219

 
360,956

 
360,956

 
—

 
—

3.25% convertible senior notes due 2015(5)
125,142

 
126,904

 
126,904

 
—

 
—

2.375% convertible senior notes due 2015(6)
60,647

 
65,882

 
65,882

 
—

 
—

Total long-term debt
$
3,354,298

 
$
3,400,761

 
$
2,783,470

 
$
617,291

 
$
—

(1) 
Net of debt discount of $2,814 and $3,453 as of June 30, 2014 and December 31, 2013, respectively.
(2) 
Net of debt discount of $2,630 and $2,853 as of June 30, 2014 and December 31, 2013, respectively.
(3) 
Net of debt discount of $76,517 and $80,717 as of June 30, 2014 and December 31, 2013, respectively.
(4) 
Net of debt discount of $48,830 and $54,781 as of June 30, 2014 and December 31, 2013, respectively.
(5) 
Net of debt discount of $1,792 and $3,040 as of June 30, 2014 and December 31, 2013, respectively.
(6) 
Net of debt discount of $2,274 and $5,242 as of June 30, 2014 and December 31, 2013, respectively.

The following tables set forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2014 and December 31, 2013, respectively. Financial and non-financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the determination of fair value for assets and liabilities and their placement within the fair value hierarchy levels.


15
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
June 30, 2014
 
Total Fair
Value
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial assets (liabilities):
 
 
 
 
 
 
 
U.S. treasury and agency securities
$
82,894

 
$
82,894

 
$
—

 
$
—

Mutual funds held in Rabbi Trust
$
9,885

 
$
9,885

 
$
—

 
$
—

Corporate equity securities
$
290,000

 
$
290,000

 
$
—

 
$
—

Corporate debt securities
$
287,056

 
$
—

 
$
287,056

 
$
—

Forward coal sales
$
1,406

 
$
—

 
$
1,406

 
$
—

Commodity swaps
$
7,469

 
$
—

 
$
7,469

 
$
—


 
December 31, 2013
 
Total Fair
Value
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial assets (liabilities):
 
 
 
 
 
 
 
U.S. treasury and agency securities
$
81,497

 
$
81,497

 
$
—

 
$
—

Mutual funds held in Rabbi Trust
$
9,330

 
$
9,330

 
$
—

 
$
—

Corporate debt securities
$
255,572

 
$
—

 
$
255,572

 
$
—

Forward coal sales
$
(398
)
 
$
—

 
$
(398
)
 
$
—

Commodity swaps
$
10,403

 
$
—

 
$
10,403

 
$
—


The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above. 

Level 1 Fair Value Measurements

U.S. Treasury and Agency Securities, Corporate Equity Securities and Mutual Funds Held in Rabbi Trust - The fair value is based on observable market data.

6.25% senior notes due 2021, 7.50% senior secured second lien notes due 2020, 6.00% senior notes due 2019, 9.75% senior notes due 2018 (collectively, the “Senior Notes”), 4.875% Convertible Notes, 3.75% Convertible Notes, 2.375% Convertible Notes, and 3.25% Convertible Notes (collectively, the “Convertible Notes”) - The fair value is based on observable market data.

Level 2 Fair Value Measurements

Corporate Debt Securities - The fair values of the Company’s corporate debt securities are obtained from a third-party pricing service provider. The fair values provided by the pricing service provider are estimated using pricing models, where the inputs to those models are based on observable market inputs including credit spreads and broker-dealer quotes, among other inputs. The Company classifies the prices obtained from the pricing services within Level 2 of the fair value hierarchy because the underlying inputs are directly observable from active markets. However, the pricing models used entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value.
 
Forward Coal Sales - The fair values of the forward coal sale contracts were estimated using discounted cash flow calculations based upon actual contract prices and forward commodity price curves. The curves were obtained from independent pricing services reflecting broker market quotes. The fair values are adjusted for counter-party credit risk, when applicable.

16
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)


Commodity Swaps - The fair values of commodity swaps are estimated using valuation models which include assumptions about commodity prices based on those observed in the underlying markets. The fair values are adjusted for counter-party credit risk, when applicable.

Term Loan due 2020 - The fair value of the term loan due 2020 is estimated based on market rates of interest offered for debt of similar maturities.

(14)    Derivative Financial Instruments
  
Forward Contracts

The Company manages price risk for coal sales and purchases through the use of coal supply agreements. The Company evaluates each of its coal sales and coal purchase forward contracts to determine whether they meet the definition of a derivative and if so, whether they qualify for the normal purchase normal sale (“NPNS”) exception. For those contracts that do meet the definition of a derivative, certain contracts also qualify for the NPNS exception based on management’s intent and ability to physically deliver or take physical delivery of the coal. Contracts that meet the definition of a derivative and do not qualify for the NPNS exception are accounted for at fair value and, accordingly, the Company includes the unrealized gains and losses in current period earnings or losses.

Swap Agreements

Commodity Swaps

The Company uses diesel fuel in its production process and incurs significant expenses for its purchase. Diesel fuel expenses represented approximately 6% of cost of coal sales for the six months ended June 30, 2014. The Company is subject to the risk of price volatility for this commodity and as a part of its risk management strategy, the Company enters into swap agreements with financial institutions to mitigate the risk of price volatility for diesel fuel. The terms of the swap agreements allow the Company to pay a fixed price and receive a floating price, which provides a fixed price per unit for the volume of purchases being hedged. As of June 30, 2014, the Company had swap agreements outstanding to hedge the variable cash flows related to 38% and 41% of anticipated diesel fuel usage for the remaining six months of 2014 and calendar year 2015, respectively. The average fixed price for these diesel fuel swaps is $2.85 per gallon and $2.76 per gallon for the remaining six months of 2014 and calendar year 2015, respectively. All cash flows associated with derivative instruments are classified as operating cash flows in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013.

The Company enters into coal sales agreements for steam coal with customers outside of the U.S. A portion of these steam coal contracts contain clauses that tie the price of the coal to be sold to the API-2 Coal Index. As part of the Company’s overall risk management strategy, the Company may enter into swap agreements with financial institutions to mitigate the risk of price volatility for its coal sales that are tied to the API-2 Coal Index. The terms of the swap agreements allow the Company to receive a fixed price and pay a floating price, which provides a fixed price per ton of coal, excluding transportation and other variable items that are included in the total price of the coal. As of June 30, 2014, the Company had swap agreements outstanding for approximately 65 tons of coal at an average price of $88.56.

The following tables present the fair values and location of the Company’s derivative instruments within the Condensed Consolidated Balance Sheets:
 
 
 
Asset Derivatives
Derivatives not designated as
cash flow hedging instruments
Statement of Financial Position Location
 
June 30,
2014
 
December 31,
2013
Commodity swaps
Prepaid expenses and other current assets
 
$
6,280

 
$
8,898

Commodity swaps
Other non-current assets
 
1,474

 
1,772

Forward coal sales
Prepaid expenses and other current assets
 
1,406

 
—

Total asset derivatives
 
 
$
9,160

 
$
10,670



17
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
 
 
Liability Derivatives
Derivatives not designated as
cash flow hedging instruments
Statement of Financial Position Location
 
June 30,
2014
 
December 31,
2013
Commodity swaps
Other non-current liabilities
 
$
—

 
$
31

Commodity swaps
Accrued expenses and other current liabilities
 
285

 
236

Forward coal sales
Accrued expenses and other current liabilities
 
—

 
398

Total liability derivatives
 
 
$
285

 
$
665


The following tables present the gains and losses from derivative instruments for the six months ended June 30, 2014 and 2013 and their location within the Condensed Consolidated Financial Statements:

Derivatives designated as
cash flow hedging instruments
 
Gain reclassified
from accumulated other
comprehensive income (loss) to earnings
 
Loss recorded
in accumulated other
comprehensive income (loss)
 
2014
 
2013
 
2014
 
2013
Commodity swaps(1) (3)
 
$
1,577

 
$
2,034

 
$
—

 
$
(942
)
Commodity options(2) (3)
 
—

 
10

 
—

 
(65
)
 
 
$
1,577

 
$
2,044

 
$
—

 
$
(1,007
)
(1) 
For the six months ended June 30, 2014, amounts included in cost of coal sales and coal revenues in the Condensed Consolidated Statements of Operations. For the six months ended June 30, 2013, amounts included in cost of coal sales, other revenues and coal revenues in the Condensed Consolidated Statements of Operations.
(2) 
Amounts are recorded in other revenues in the Condensed Consolidated Statements of Operations.
(3) 
Net of tax.

Derivatives not designated as
cash flow hedging instruments
 
Gain (loss) recorded in earnings
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Forward coal sales(1)
 
$
(572
)
 
$
4,392

 
$
1,804

 
$
(1,205
)
Forward coal purchases(1)
 
16

 
4

 
—

 
8

Commodity swaps(2)
 
3,806

 
(270
)
 
2,206

 
(20
)
 
 
$
3,250

 
$
4,126

 
$
4,010

 
$
(1,217
)
(1) 
Amounts are recorded as a component of other revenues in the Condensed Consolidated Statements of Operations.
(2) 
Amounts are recorded as a component of coal revenues, cost of coal sales and other expenses in the Condensed Consolidated Statements of Operations.

Unrealized losses recorded in accumulated other comprehensive income (loss) are reclassified to income or loss as the financial swaps settle and the Company purchases the underlying items that are being hedged. During the next twelve months, the Company expects to reclassify approximately ($464), net of tax, to earnings.

(15)    Income Taxes

A reconciliation of the statutory federal income tax benefit at 35% to the actual income tax expense (benefit) is as follows:

18
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Federal statutory income tax benefit
$
(182,751
)
 
$
(96,323
)
 
$
(185,950
)
 
$
(161,824
)
Increases (reductions) in taxes due to:
 
 
 
 
 
 
 
Percentage depletion allowance
(9,743
)
 
(9,155
)
 
(18,973
)
 
(20,847
)
State taxes, net of federal tax impact
(6,193
)
 
(3,773
)
 
(1,741
)
 
(10,039
)
Non-deductible fines and penalties
971

 
10,064

 
1,561

 
11,219

Non-deductible goodwill impairment
108,028

 
—

 
108,028

 
—

Reversal of reserves for uncertain tax positions
(8,090
)
 
—

 
(8,090
)
 
—

Change in valuation allowance
87,485

 
5,601

 
137,603

 
7,684

Other, net
775

 
4,059

 
4,602

 
7,922

Income tax expense (benefit)
$
(9,518
)
 
$
(89,527
)
 
$
37,040

 
$
(165,885
)

Under ASC 740-270, “Income Taxes - Interim Reporting”, a company should calculate an estimated annual effective tax rate and apply the estimated tax rate to the year-to-date operating results. If a company is unable to make a reliable estimate of the annual effective tax rate, then the actual effective tax rate for the year-to-date period should be used as the best estimate of the annual effective tax rate (the “discrete method”). For the three and six months ended June 30, 2014, the Company concluded that the use of the discrete method was more appropriate than the estimated annual effective tax rate method due to the sensitivity of the change in valuation allowance resulting from changes in deferred tax balances and their related reversal timing.

The Company recorded an increase of $87,485 and $137,603 to its deferred tax asset valuation allowance during the three and six months ended June 30, 2014, respectively. The change in valuation allowance results from an increase in net operating losses and other deferred tax assets for which the Company is unable to support realization. The Company currently is relying primarily on the reversal of taxable temporary differences, along with consideration of taxable income via carryback to prior years, and tax planning strategies to support the realization of deferred tax assets. The Company updates its assessment regarding the realizability of its deferred tax assets including scheduling the reversal of its deferred tax liabilities each quarter to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. The Company believes the deferred tax liabilities relied upon as future taxable income in its assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. The valuation allowance recorded represents the portion of deferred tax assets for which the Company is unable to support realization through the methods described above. The Company has concluded that it is more likely than not that the remaining deferred tax assets, net of valuation allowances, are realizable.

During the quarter ended June 30, 2014, the Company settled audits with the Internal Revenue Service for the 2009 and 2010 tax years. As a result, the Company determined that particular uncertain tax positions were deemed to be effectively settled, resulting in a decrease in unrecognized tax benefits of $26,020 and the recording of an income tax benefit of $8,090. The settlement of the audits resulted in no material impact on cash paid for income taxes.

(16)    Employee Benefit Plans

The Company sponsors or participates in several benefit plans for its employees, including postretirement health care and life insurance, defined benefit and defined contribution pension plans, and provides black lung benefits.

Components of Net Periodic Pension Costs

The components of net periodic benefit credits are as follows:

19
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Interest cost
$
9,577

 
$
6,756

 
$
15,605

 
$
14,453

Expected return on plan assets
(10,264
)
 
(8,923
)
 
(17,603
)
 
(18,144
)
Amortization of net actuarial loss
89

 
16

 
89

 
507

Loss on settlement
—

 
58

 
—

 
58

Net periodic benefit credit
$
(598
)
 
$
(2,093
)
 
$
(1,909
)
 
$
(3,126
)

Components of Net Periodic Costs of Other Postretirement Benefit Plans

The components of net periodic benefit costs are as follows:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Service cost
$
2,158

 
$
3,680

 
$
5,842

 
$
7,283

Interest cost
10,962

 
9,894

 
21,446

 
19,616

Amortization of prior service credit
(939
)
 
(955
)
 
(1,894
)
 
(1,909
)
Amortization of net actuarial loss
—

 
1,424

 
—

 
2,461

Net periodic benefit cost
$
12,181

 
$
14,043

 
$
25,394

 
$
27,451


Components of Net Periodic Costs of Black Lung

The components of net periodic benefit costs are as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
Service cost
$
382

 
$
648

 
$
1,076

 
$
1,419

Interest cost
1,875

 
1,738

 
3,599

 
3,134

Expected return on plan assets
(92
)
 
2

 
(116
)
 
(16
)
Amortization of net actuarial loss (gain)
(54
)
 
618

 
3

 
618

Net periodic benefit cost
$
2,111

 
$
3,006

 
$
4,562

 
$
5,155



(17)    Stock-Based Compensation Awards

On May 22, 2014, the Company's stockholders approved the Amended and Restated 2012 Long-Term Incentive Plan (the “2012 LTIP”). The principal purpose of the 2012 LTIP is to advance the interests of the Company and its stockholders by providing incentives to certain eligible persons who contribute significantly to the strategic and long-term performance objectives and growth of the Company. On May 22, 2014, the Company's stockholders approved an additional 3,100,000 shares of common stock for issuance under the 2012 LTIP Plan. The 2012 LTIP Plan is currently authorized for the issuance of awards of up to 13,100,000 shares of common stock, and as of June 30, 2014, 4,288,721 shares of common stock were available for grant under the plan.

During the six months ended June 30, 2014, the Company awarded certain of its executives and key employees 1,318,887 time-based restricted share units and 1,301,473 performance-based restricted share units under its existing stock plans. Additionally, during the six months ended June 30, 2014, the Company also awarded certain of its executives and key employees 2,055,561 time-based restricted cash units and 1,301,473 performance-based restricted cash units which are

20
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

accounted for as liability awards and subject to variable accounting. The liability for these awards totaled $1,924 as of June 30, 2014.

The time-based units vest, subject to continued employment, ratably over three years or cliff vest after three years (with accelerated vesting upon a change of control and certain retirement scenarios). The performance-based units cliff vest after three years, subject to continued employment and the satisfaction of the performance criteria (with accelerated vesting upon a change of control and certain retirement scenarios). The performance-based units have the potential to be distributed from 0% to 200% of the awarded amount, depending on the actual results versus the pre-established performance criteria over the three-year period.

At June 30, 2014, the Company had three types of stock-based awards outstanding: restricted share units (both time-based and performance-based), restricted cash units (both time-based and performance based), and stock options. Stock-based compensation expense totaled $7,811 and $6,863 for the three months ended June 30, 2014 and 2013, respectively. Stock-based compensation expense totaled $13,921 and $12,598 for the six months ended June 30, 2014 and 2013, respectively. For the three months ended June 30, 2014 and 2013, approximately 76% and 77%, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses. For the six months ended June 30, 2014 and 2013, approximately 74% and 79%, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses. Approximately 24% and 23%, of stock-based compensation expense was recorded as cost of coal sales for the three months ended June 30, 2014 and 2013, respectively. Approximately 26% and 21%, of stock-based compensation expense was recorded as cost of coal sales for the six months ended June 30, 2014 and 2013, respectively.

The Company is authorized to repurchase common shares from employees (upon the election by the employee) to satisfy the employees’ minimum statutory tax withholdings upon the vesting of restricted stock and restricted share units (both time-based and performance-based). Shares that are repurchased to satisfy the employees’ minimum statutory tax withholdings are recorded in treasury stock at cost. During the six months ended June 30, 2014 and 2013, the Company repurchased 220,465 and 144,622, respectively, of common shares from employees at an average price paid per share of $5.27 and $8.55, respectively.

(18)    Commitments and Contingencies

(a) General

Estimated losses from loss contingencies are accrued by a charge to income when information available indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the consolidated financial statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material.

(b) Commitments and Contingencies

Commitments

The Company leases coal mining and other equipment under long-term capital and operating leases with varying terms. In addition, the Company leases mineral interests and surface rights from land owners under various terms and royalty rates.

The Company has obligations for a federal coal lease, which contains an estimated 222,000 tons of proven and probable coal reserves in the Powder River Basin. The annual installments in the period from 2014 through 2015 of $42,130 are due each November until the obligation is satisfied.

The Company also has obligations under certain coal transportation agreements that contain minimum quantities to be shipped each year. Minimum amounts due under these contracts for 2015, 2016, 2017, 2018 and beyond are $39,904, $59,184, $17,540, $12,930 and $279,473 respectively.
 
Contingencies
 
Extensive regulation of the impacts of mining on the environment and of maintaining workplace safety, and related litigation, has had or may have a significant effect on the Company’s costs of production and results of operations. Further

21
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

regulations, legislation or litigation in these areas may also cause the Company’s sales or profitability to decline by increasing costs or by hindering the Company’s ability to continue mining at existing operations or to permit new operations.

During the normal course of business, contract-related matters arise between the Company and its customers. When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability. During the first quarter of 2013, the Company recorded a gain of ($55,454) in other expenses in the Condensed Consolidated Statement of Operations related to the resolution of a contract-related matter.
 
(c) Guarantees and Financial Instruments with Off-Balance Sheet Risk
 
In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Condensed Consolidated Balance Sheets. The Company is self bonded with respect to certain performance obligations, including reclamation, for approximately $637,623. Management does not expect any material losses to result from these guarantees or other off-balance sheet financial instruments.
 
Letters of Credit
 
As of June 30, 2014, the Company had $133,072 of letters of credit outstanding under its senior secured revolving facility.

(d) Legal Proceedings
The Company’s legal proceedings range from cases brought by a single plaintiff to purported class actions. These legal proceedings, as well as governmental examinations, involve various business units and a variety of claims including, but not limited to, contract disputes, personal injury claims, property damage claims (including those resulting from blasting, trucking and flooding), environmental and safety issues, and employment matters. While some matters pending against the Company or its subsidiaries specify the damages claimed by the plaintiffs, many seek an unquantified amount of damages or are at very early stages of the legal process. Even when the amount of damages claimed against the Company or its subsidiaries is stated, (i) the claimed amount may be exaggerated or unsupported; (ii) the claim may be based on a novel legal theory or involve a large number of parties; (iii) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (iv) there may be uncertainty as to the outcome of pending appeals or motions; and/or (v) there may be significant factual issues to be resolved. As a result, the Company may be unable to estimate a range of possible loss for matters that have not yet progressed sufficiently through discovery and development of important factual information and legal issues. Other matters have progressed sufficiently that the Company is able to estimate a range of possible loss. Accordingly, for those legal proceedings and governmental examinations disclosed below as to which a loss is reasonably possible in future periods and for which the Company is able to estimate a range of possible loss, the current estimated range is up to $100,000 in excess of the accrued liability (if any) related to those matters. This aggregate range represents the Company’s estimate of additional possible loss in excess of the accrued liability (if any) with respect to these matters and net of third party indemnification arrangements (if any, other than insurance) as described below related to those matters, based on currently available information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherent uncertainties. For example, at the time of making an estimate, the Company may have only preliminary, incomplete, or inaccurate information about the facts underlying a claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives of adverse parties, regulators, indemnitors or co-defendants, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to the use of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that the Company had not accounted for in its estimate because it had considered that outcome to be remote. Furthermore, as noted above, the aggregate range does not include any matters for which the Company is not able to estimate a range of possible loss. Accordingly, the estimated aggregate range of possible loss does not represent the Company’s maximum loss exposure. The legal proceedings and governmental examinations underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The Company intends to defend these legal proceedings vigorously, litigating or settling cases where in the Company’s judgment it would be in the best interest of shareholders to do so.

For purposes of FASB ASC Topic 450 (“ASC 450”), an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” ASC 450 requires accrual for a liability when it is (a) “probable that one or more future events will occur

22
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

confirming the fact of loss” and (b) “the amount of loss can be reasonably estimated.” If a range of loss is estimated, the best estimate within the range is required to be accrued. If no amount within the range is a better estimate, the minimum amount of the range is required to be accrued.
 
The Company evaluates, on a quarterly basis, developments in legal proceedings and governmental examinations that could cause an increase or decrease in the amount of the reserves previously recorded. Excluding fees paid to external legal counsel, the Company recognized (income) expense, net of expected insurance recoveries, associated with litigation-related reserves of ($17,980) and $25,896 during the three months ended June 30, 2014 and 2013, respectively.
 
Federal Securities Class Actions

Upper Big Branch (“UBB”) Purported Securities Class Action
 
On April 29, 2010 and May 28, 2010, two purported class actions that were subsequently consolidated into one case were brought against, among others, Massey, now the Company’s subsidiary Alpha Appalachia Holdings, Inc. (“Alpha Appalachia”), in the United States District Court for the Southern District of West Virginia (the “Court”) in connection with alleged violations of the federal securities laws. The lead plaintiffs allege, purportedly on behalf of a class of former Massey stockholders, that (i) Massey and certain former Massey directors and officers violated Section 10(b) of the Securities and Exchange Act of 1934, as amended, (the “Exchange Act”), and Rule 10b-5 thereunder by intentionally misleading the market about the safety of Massey’s operations and that (ii) Massey’s former officers violated Section 20(a) of the Exchange Act by virtue of their control over persons alleged to have committed violations of Section 10(b) of the Exchange Act. The lead plaintiffs sought a determination that this action was a proper class action; certification as class representatives; an award of compensatory damages in an amount to be proven at trial, including interest thereon; and an award of reasonable costs and expenses, including counsel fees and expert fees.
 
On February 16, 2011, the lead plaintiffs moved to partially lift the statutory discovery stay imposed under the Private Securities Litigation Reform Act of 1995. On March 3, 2011, the United States moved to intervene and to stay discovery until the completion of criminal proceedings allegedly arising from the same facts that allegedly give rise to this action. On July 9, 2012, the court entered an order maintaining the stay of discovery until the earlier of either the completion of the United States’ criminal investigation of the UBB explosion or January 15, 2013. The court extended the stay several times.
 
On April 25, 2011, the defendants moved to dismiss the operative complaint. On March 27, 2012, the court denied the defendants’ motion to dismiss. On July 16, 2012, the Company filed its answer to the consolidated amended class action complaint.

In October and December 2013, the parties participated in mediation. In December 2013, the parties reached agreement on all material terms of settlement, including a cash payment of $265,000. In February 2014, the parties reached agreement on definitive settlement documentation, subject to court approval, and on February 5, 2014, the lead plaintiffs moved the court for preliminary approval of the settlement. On February 19, 2014, the Court entered an order preliminarily approving the settlement subject to a final determination following a settlement hearing on June 4, 2014. On February 25, 2014, pursuant to the terms of the settlement, the Company made an initial payment of $30,000 into an escrow account and on June 3, 2014, the Company deposited the remaining $235,000 of the settlement amount into the escrow account. The Company received approximately $70,000 of insurance proceeds in connection with the settlement. On June 4, 2014, the Court entered an order approving the settlement and dismissed the class action with prejudice.
Emerald Purported Securities Class Action

On July 13, 2012, a purported class action brought on behalf of a putative class of former Massey stockholders was filed in Boone County, West Virginia Circuit Court. The complaint asserts claims under the Securities Act of 1933, as amended, against the Company and certain of its officers and current and former directors, and generally asserts that the defendants made false statements about the Company’s Emerald mine in its public filings associated with the acquisition of Massey by the Company (the “Massey Acquisition”). The plaintiff seeks, among other relief, an award of compensatory damages in an amount to be proven at trial.


23
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

On August 16, 2012, the defendants removed the case to the United States District Court for the Southern District of West Virginia. On August 30, 2012, the plaintiff filed a motion to remand the case back to the Circuit Court of Boone County, West Virginia. On September 13, 2012, the defendants filed an opposition to the plaintiff’s motion to remand.

The defendants filed a motion to dismiss the action on October 19, 2012, and the plaintiff filed an opposition to that motion on November 2, 2012. On November 5, 2012, the federal court remanded the case back to the Boone County Circuit Court (without ruling on the pending motion to dismiss). The plaintiff filed an amended complaint in the Boone County Circuit Court on February 6, 2013. The defendants filed motions to dismiss the amended complaint on March 22, 2013 and March 29, 2013. On March 27, 2014, the Boone County Circuit Court held a hearing regarding the motions to dismiss. The motions remain pending.
On April 25, 2014, the named plaintiff in the West Virginia Circuit Court action described above filed a second complaint in Greene County, Pennsylvania, Court of Common Pleas, again asserting claims under the Securities Act of 1933, as amended, against the Company and certain of its officers and current and former directors, and generally asserts that the defendants made false statements about the Company’s Emerald mine in its public filings associated with the Massey Acquisition. The plaintiff seeks, among other relief, an award of compensatory damages in an amount to be proven at trial.

UBB Explosion and Related Investigations and Litigation
 
On April 5, 2010, before the Massey Acquisition by the Company, an explosion occurred at the UBB mine, resulting in the deaths of 29 miners. The Federal Mine Safety and Health Administration (“MSHA”), the Office of Miner’s Health, Safety, and Training of the State of West Virginia (“State”), and the Governor’s Independent Investigation Panel (“GIIP”) initiated investigations into the cause of the UBB explosion and related issues. Additionally, the United States Attorney for the Southern District of West Virginia (the “Office”) commenced a grand jury investigation. The GIIP published its final report on May 19, 2011; MSHA released its final report on December 6, 2011; and the State released its final report on February 23, 2012.
 
On December 6, 2011, the Company, the Office and the United States Department of Justice entered into a Non-Prosecution Agreement (the “Agreement”) resolving the criminal investigation against Massey and its affiliates relating to the UBB explosion and other health and safety related issues at Massey, and the Company also reached a comprehensive settlement with MSHA resolving outstanding civil citations, violations, and orders related to MSHA’s investigation arising from the UBB explosion and other non-UBB related matters involving legacy Massey entities prior to the Massey Acquisition. The Agreement does not resolve individual responsibilities related to the UBB explosion.
 
Under the terms of the Agreement and MSHA settlement, the Company agreed to pay outstanding MSHA fines, and agreed to invest in additional measures designed to improve miner health and safety, provide restitution to the families of the fallen miners and two individuals injured in the UBB explosion, and create a charitable organization to research mine safety. The Company further agreed to cooperate fully with all governmental agencies in all continuing investigations and prosecutions against any individuals that arise out of the UBB explosion and related conduct described in the Agreement until such investigations and prosecutions are concluded.
 
On February 10, 2014, the Company announced that it had fully complied with the terms of the Agreement and that the Office and the United States Department of Justice had closed the Agreement.
The Company cannot predict the outcome of these investigations, including whether or not any individual will become subject to possible criminal and civil penalties or enforcement actions. In order to accommodate these investigations, the UBB mine was initially idled. On April 20, 2012, the Company was authorized by regulatory authorities to close the UBB mine permanently, and on June 19, 2012, the sealing of the mine was completed.

On June 28, 2012, sixteen individuals who claim to have been injured in the UBB explosion filed a petition in the United States District Court for the Southern District of West Virginia to amend or set aside the Agreement. On July 27, 2012, Alpha and Alpha Appalachia filed a motion to dismiss. The injury claims of those sixteen individuals were separately settled in August 2012, and on August 29, 2012, the court ordered that the action be dismissed and stricken from the docket.

On October 19, 2012, the administrators for the estates of three miners who died in the UBB explosion filed an action against Alpha and Alpha Appalachia in the United States District Court for the Southern District of West Virginia claiming they are entitled to “criminal restitution” under the Agreement. On November 27, 2012, the defendants filed their motion to dismiss

24
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

the complaint. The plaintiffs were subsequently granted leave to amend their complaint, which they filed on January 23, 2013. On May 10, 2013, the court dismissed the amended complaint. On July 17, 2013, the plaintiffs filed another complaint seeking “criminal restitution” under the Agreement, which defendants moved to dismiss on August 12, 2013. The same plaintiffs filed their appeal of the May dismissal with the United States Court of Appeals for the Fourth Circuit on June 5, 2013. On October 18, 2013, the Court of Appeals dismissed the appeal for lack of jurisdiction. On October 30, 2013, the court granted defendants’ motion to dismiss the complaint filed on July 17, 2013 with prejudice. The plaintiffs have appealed this dismissal order.

Wrongful Death and Personal Injury Suits
 
Twenty of the twenty-nine families of the deceased miners filed wrongful death suits against Massey and certain of its subsidiaries in Boone County Circuit Court and Wyoming County Circuit Court. In addition, as of July 19, 2013, two seriously injured employees had filed personal injury claims against Massey and certain of its subsidiaries in Boone County Circuit Court seeking damages for physical injuries and/or alleged psychiatric injuries, and thirty-nine employees had filed lawsuits against Massey and certain of its subsidiaries in Boone County Circuit Court and Wyoming County Circuit Court alleging emotional distress or personal injuries due to their proximity to the explosion. On April 19, 2012, the Company filed a motion to transfer the Wyoming County lawsuits to Boone County.

On October 19, 2011, the Boone County Circuit Court ordered that the cases pending before it be mediated by a panel of three mediators. These mediations are, per order of the court, strictly confidential. The Company reached agreements to settle with all twenty-nine families of the deceased miners as well as the two employees who were seriously injured. The settlements reached with the families of the deceased miners have received court approval. The settlements relating to the two serious injuries did not require court approval.

On May 4, 2012, the Boone County Circuit Court ordered that the remaining personal injury and emotional distress claims continue to be mediated through July 6, 2012. Until that date, a stay was in place for all remaining cases until further order from the court. The stay was lifted on July 6, 2012 but mediation was ordered to continue. On July 20, 2012, the stay was reinstated for discovery-related activities at the request of the United States Attorney and by agreement of the parties. On August 19, 2013, at the request of the United States Attorney, the stay was extended until the earlier of either the completion of the United States’ criminal investigation of the UBB explosion or January 15, 2014. Mediation efforts in August 2012 successfully resolved all but two of the personal injury and emotional distress claims. On June 26, 2013, the court granted the Company’s motion to dismiss in part, dismissing plaintiffs’ claims alleging the tort of outrage and negligent infliction of emotional distress. Plaintiffs’ two remaining claims have been resolved. The Wyoming County lawsuits were settled and dismissed prior to the court ruling on the Company’s motion to transfer.

On April 5, 2012, the family of one of the deceased miners filed a class action suit in Boone County Circuit Court, purportedly on behalf of the families that settled their claims prior to the mediation, alleging fraudulent inducement into a contract, naming as defendants Massey, the Company and certain of its subsidiaries, the Company’s CEO and the Company’s Board of Directors.

On June 17, 2013 and August 29, 2013, two complaints were filed in Boone County Circuit Court alleging personal injury claims relating to the UBB explosion. The Company moved to dismiss both complaints on July 17, 2013 and October 16, 2013, respectively. On July 21, 2014, the Circuit Court granted the Company's motion to dismiss. The second motion remains pending.
 
Uniform Fraudulent Transfers Act Action
 
On June 1, 2011, certain of the plaintiffs who had filed wrongful death cases filed a complaint against Massey, Massey Coal Services, Inc., Performance Coal Company, and certain individuals in the Circuit Court of Boone County, West Virginia, alleging that the Massey Acquisition represented a fraudulent transfer intended to prevent plaintiffs from recovering damages in their wrongful death actions. Plaintiffs requested that the court order defendants to post a bond of at least $500,000. Each plaintiff in this action has agreed to settle their wrongful death cases, as discussed above, and as part of those settlements, has also agreed to dismiss this action. On May 14, 2012, the court entered an order dismissing this case with prejudice.
  
Derivative and Related Class Action Litigation

UBB-Related Derivatives Actions

25
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
A number of purported former Massey stockholders have brought lawsuits derivatively, purportedly on behalf of Massey, in West Virginia and Delaware state courts, in connection with the April 5, 2010 explosion at the UBB mine and in connection with claims allegedly arising out of the Massey Acquisition. Certain of these former stockholders have also initiated contempt proceedings in West Virginia state court in connection with alleged violations of the settlement of a previous derivative lawsuit. In addition, these and other purported former Massey stockholders have asserted class action claims allegedly arising out of the Massey Acquisition in Delaware and West Virginia state courts and Virginia federal court. These cases are summarized below.

Delaware Chancery Court Suit
 
In a case filed on April 23, 2010 in Delaware Chancery Court, In re Massey Energy Company Derivative and Class Action Litigation (“In re Massey”), a number of purported former Massey stockholders (the “Delaware Plaintiffs”) allege, purportedly on behalf of Massey, that certain former Massey directors and officers breached their fiduciary duties by failing to monitor and oversee Massey’s employees, allegedly resulting in fines against Massey and the explosion at UBB, and by wasting corporate assets by paying allegedly excessive and inflated amounts to former Massey Chairman and Chief Executive Officer Don L. Blankenship as part of his retirement package. The Delaware Plaintiffs also allege, on behalf of a purported class of former Massey stockholders, that certain former Massey directors breached their fiduciary duties by agreeing to the Massey Acquisition. The Delaware Plaintiffs allege that defendants breached their fiduciary duties by failing to secure the best price possible, by failing to secure any downside protection for the acquisition consideration, and by purportedly eliminating the possibility of a superior proposal by agreeing to a “no shop” provision and a termination fee. In addition, the Delaware Plaintiffs allege that defendants agreed to the Massey Acquisition to eliminate the liability that defendants faced on the Delaware Plaintiffs’ derivative claims. Finally, the Delaware Plaintiffs allege that defendants failed to fully disclose all material information necessary for Massey stockholders to cast an informed vote on the Massey Acquisition.
 
The Delaware Plaintiffs also name the Company and Mountain Merger Sub, Inc. (“Merger Sub”), the Company’s wholly-owned subsidiary created for purposes of effecting the Massey Acquisition, which, at the effective time of the Massey Acquisition, was merged with and into Massey, as defendants. The Delaware Plaintiffs allege that the Company and Merger Sub aided and abetted the former Massey directors’ alleged breaches of fiduciary duty and agreed to orchestrate the Massey Acquisition for the purpose of eliminating the former Massey directors’ potential liability on the derivative claims. Two additional putative class actions were brought against Massey, certain former Massey directors and officers, the Company and Merger Sub in the Delaware Court of Chancery following the announcement of the Massey Acquisition, which were consolidated for all purposes with In re Massey on February 9, 2011 and February 24, 2011, respectively.
 
The Delaware Plaintiffs seek an award against each defendant for restitution and/or compensatory damages, plus pre-judgment interest; an order establishing a litigation trust to preserve the derivative claims asserted in the complaint; and an award of costs, disbursements and reasonable allowances for fees incurred in this action. The Delaware Plaintiffs also sought to enjoin consummation of the Massey Acquisition. The court denied their motion for a preliminary injunction on May 31, 2011.
 
On June 10, 2011, Massey moved to dismiss the Delaware Plaintiffs’ derivative claims on the ground that the Delaware Plaintiffs, as former Massey stockholders, lacked the legal right to pursue those claims, and the Company and Alpha Appalachia Merger Sub moved to dismiss the purported class action claim against them for failure to state a claim upon which relief may be granted. On June 10 and 13, 2011, certain former Massey director and officer defendants moved to dismiss the derivative claims and filed answers to the remaining direct claims.
 
On September 14, 2011, the parties submitted a Stipulation Staying Proceedings, which stayed the matter until March 1, 2012, without prejudice to the parties’ right to seek an extension or a termination of the stay by application to the court. The court approved the stipulation and entered the stay that same day. The court has extended the stay several times; most recently, on February 4, 2014, the court further extended the existing discovery stay until the earlier of the completion of the United States’ criminal investigation of the UBB explosion or July 15, 2014. In July 2014, the Company requested that the court extend the stay until the earlier of the completion of the United States’ criminal investigation of the UBB explosion or January 15, 2015.
 
West Virginia State Court Derivative Suit
 
In a case filed on April 15, 2010 in West Virginia state court, three purported former Massey stockholders (the “West Virginia Plaintiffs”) allege, purportedly on behalf of Massey, that certain former Massey directors and officers breached their

26
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

fiduciary duties by failing to monitor and oversee Massey’s employees, allegedly resulting in fines against Massey and the explosion at UBB. The West Virginia Plaintiffs seek an award against each defendant and in favor of Massey for the amount of damages sustained by Massey as a result of defendants’ alleged breaches of fiduciary duty and an award to the West Virginia Plaintiffs of the costs and disbursements of the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.
 
On May 2, 2011, the West Virginia Plaintiffs moved for leave to amend their complaint to add Alpha and Merger Sub as additional defendants and to add claims allegedly arising out of the then-proposed Massey Acquisition. In their proposed amended complaint, the West Virginia Plaintiffs allege that certain former Massey directors breached their fiduciary duties by failing to obtain the highest price reasonably available for Massey and by failing to disclose material information to Massey’s then-stockholders in connection with the stockholder vote on the Massey Acquisition. The West Virginia Plaintiffs also allege that Massey, Merger Sub and the Company aided and abetted the former Massey directors’ breaches of fiduciary duty. The West Virginia Plaintiffs further allege that certain former Massey directors wasted corporate assets by failing to maintain sufficient internal controls over Massey’s safety and environmental reporting; failing to properly consider the interests of Massey and its stockholders, including the value of the derivative claims asserted by the West Virginia Plaintiffs in the Massey Acquisition; failing to conduct proper supervision; paying undeserved incentive compensation to certain Massey executive directors, particularly former Massey Chairman and CEO Don L. Blankenship during Massey’s alleged years of noncompliance with safety regulations and more recently as part of Blankenship’s retirement package; incurring millions of dollars in fines due to safety and environmental violations; and incurring potentially hundreds of millions of dollars of legal liability and/or legal costs to defend defendants’ allegedly unlawful actions. Finally, the West Virginia Plaintiffs’ proposed amended complaint alleges that certain former Massey directors were unjustly enriched by their compensation as directors.
 
On May 25, 2011, the West Virginia Plaintiffs filed a petition with the West Virginia Supreme Court for a preliminary injunction against the consummation of the Massey Acquisition, which was denied on May 31, 2011.
 
On June 24, 2011, the defendants moved to dismiss the West Virginia Plaintiffs’ original complaint on the grounds that plaintiffs, as former Massey stockholders, lacked the legal right to pursue those claims, or, alternatively, to stay this case in favor of In re Massey, described above. Defendants also filed an opposition to the West Virginia Plaintiffs’ motion to amend.  On August 19, 2011, the West Virginia Plaintiffs filed a combined memorandum in opposition to defendants’ motion to dismiss or stay and in further support of their motion to amend. On August 22, 2011, defendants filed a memorandum in further support of their motion to dismiss or stay and in further opposition to plaintiffs’ motion to amend. On August 23, 2011, the court held a hearing on defendants’ motion to dismiss and plaintiffs’ motion to amend. Without deciding the motions, the court requested the parties to submit competing proposed orders containing findings of fact and conclusions of law and proposed scheduling orders for the court’s consideration, which the parties did on September 9, 2011. On November 14, 2013, the court denied the West Virginia Plaintiffs’ motion to amend and granted defendants’ motion to dismiss. The West Virginia Plaintiffs have appealed the denial of motion to amend and dismissal to the Supreme Court of Appeals of West Virginia.
 
West Virginia State Court - Contempt Proceedings
 
On April 16, 2010, Manville Personal Injury Settlement Trust (“Manville”), one of the West Virginia Plaintiffs, filed a petition in the Circuit Court of Kanawha County, West Virginia, requesting that the court initiate civil contempt proceedings against certain of the then-current members of Massey’s board of directors with respect to alleged violations of a settlement agreement. In July 2007, Manville filed a complaint, purportedly on behalf of Massey, alleging that certain of Massey’s then directors and officers breached their fiduciary duties. On May 20, 2008, the parties executed a stipulation of settlement, which the court subsequently approved. The settlement provided for a release of all claims that were or could have been asserted on behalf of Massey in exchange for, among other things, certain corporate governance reforms and an agreement that the Massey board of directors would make a Corporate Social Responsibility Report to its stockholders on an annual basis that would include, among other things, a report on Massey’s environmental and worker safety compliance. Manville alleges that Massey’s 2009 Corporate Social Responsibility Report did not contain a sufficient report on worker safety compliance. On April 22, 2010, the court issued an order for a rule to show cause, initiating the contempt proceedings.
 
On May 31, 2011, Manville, now joined by the other two West Virginia Plaintiffs, filed a new petition for civil contempt, requesting that the court initiate civil contempt proceedings against certain of the then-current members of Massey’s board of directors and certain then-current Massey officers in connection with certain additional alleged violations of the settlement.
 

27
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

On June 22, 2011, the individual defendants that had been served with the new petition filed a motion to dismiss that petition, as well as the original April 16 petition, and also moved to vacate the 2008 order, in which the court approved the settlement, as against them. On June 28, 2011, nominal defendant Alpha Appalachia joined in the individual defendants’ motions to dismiss and vacate. On July 21, 2011, the court held a hearing on the defendants’ motions to dismiss and vacate.
 
On September 29, 2011, the court granted the individual defendants’ motions to dismiss and vacate and ordered that the contempt proceedings be terminated in their entirety. The plaintiffs appealed the dismissal of the contempt proceedings to the Supreme Court of Appeals of West Virginia. On September 12, 2013, the Supreme Court of Appeals of West Virginia affirmed the September 29, 2011 order granting defendants’ motion to dismiss the contempt petitions.
 
Mine Water Discharge Suits
 
On March 20, 2012, three environmental groups filed a citizen’s suit against two of the Company’s subsidiaries, Alex Energy, Inc. and Elk Run Coal Company, Inc., in federal court in the Southern District of West Virginia alleging violations of the terms of the subsidiaries’ water discharge permits. The plaintiffs seek a civil penalty as well as injunctive relief. On June 4, 2014, the Court entered partial summary judgment against the subsidiaries.

On May 9, 2012, three environmental groups filed a citizen’s suit in federal court in the Southern District of West Virginia against two of the Company’s subsidiaries alleging violations of the terms of the subsidiaries’ water discharge permits. The plaintiffs seek a civil penalty as well as injunctive relief. In 2014, the Court entered partial summary judgment against one of the subsidiaries.

On May 15, 2012, the West Virginia Department of Environmental Protection filed a civil enforcement action against the Company’s subsidiary Riverside Energy Company, LLC, in McDowell County Circuit Court in West Virginia seeking civil penalties and injunctive relief based on alleged discharge of selenium in excess of permitted levels. This case is likely to be mooted by the Consent Decree, which is discussed below.

On July 16, 2012, three environmental groups filed a citizen’s suit in federal court in the Southern District of West Virginia against seven of the Company’s subsidiaries alleging violations of the terms of the subsidiaries’ water discharge permits. The plaintiffs seek a civil penalty as well as injunctive relief. In 2014, the Court entered partial summary judgment against one of the subsidiaries.

On December 31, 2012 and January 2, 2013, two separate environmental groups filed citizen’s suits in federal court in the Western District of Pennsylvania against Emerald Coal Resources, L.P., and other of the Company’s subsidiaries, alleging violations of the terms of the subsidiaries’ water discharge permits. The first of these cases has since been voluntarily dismissed by the plaintiffs. The plaintiffs in the remaining case seek a civil penalty as well as injunctive relief. This case is likely to be mooted by the Consent Decree.
On March 27, 2013, the Company’s subsidiary Alex Energy, Inc. (“Alex”) was served with a complaint from the Sierra Club, and others, alleging improper discharges by Alex into Spruce Run and Road Fork of Robinson Creek in Nicholas County, West Virginia. Alex has appropriate permits for discharges into those tributaries, and the discharges discussed in the plaintiffs’ complaint are undertaken by Alex in compliance with its permits.
On April 10, 2013, the Company’s subsidiary Bandmill Coal Co. (“Bandmill”) was served with a complaint from the Sierra Club, and others, alleging discharges of selenium from the site of Bandmill’s former Tower Mountain surface mine into waters of the United States without a proper permit. The Tower Mountain site is closed, the property has been reclaimed and West Virginia regulators previously determined that Bandmill no longer needs a National Pollutant Discharge Elimination System (“NPDES”) permit for the Tower Mountain site at issue. Bandmill was also released from its obligations to monitor and treat water discharging from the site. Bandmill believes it has operated in compliance with all laws and regulations regarding discharges from the Tower Mountain site.
On July 23, 2013, the Company’s subsidiary, Alex Energy, Inc., was served with a complaint alleging that discharges from the PGM No. 1 surface mine into Hardway Branch of Twentymile Creek violated state water quality standards for selenium. In July 2014, the Court entered partial summary judgment against Alex.

28
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

On July 29, 2013, the Company’s subsidiary, Pigeon Creek Processing Co. (“Pigeon Creek”), was notified by environmental groups that they intend to sue Pigeon Creek for discharging selenium from the Stonega impoundment area without the proper authorization in the NPDES permit. To date, no suit has been filed in this matter.
On October 3, 2013, Bandmill was notified by environmental groups that they intend to sue Bandmill for alleged discharges from the Right Hand Fork Surface Mine in connection with state water quality standards for selenium. To date, no suit has been filed in this matter.
On May 21, 2014, the Company’s subsidiary, Dickenson-Russell Coal Company (“DRCC”), was notified by environmental groups that they intend to sue DRCC for alleged discharges from the Moss #3 Preparation Plant in connection with wasteload allocations for total dissolved solids (TDS). To date, no suit has been filed.
On March 5, 2014, Alpha entered into a consent decree (the “Consent Decree”) with the EPA, the U.S. Department of Justice and three states regarding claims under the Clean Water Act. The Consent Decree resolves a complaint by the EPA and state agencies in Kentucky, Pennsylvania and West Virginia alleging that the Alpha’s mining affiliates in those states and in Tennessee and Virginia exceeded certain water discharge permit limits during the period 2006 to 2013. As part of the Consent Decree, Alpha agreed to implement an integrated environmental management system and an expanded auditing/reporting protocol, install selenium and osmotic pressure treatment facilities at specific locations, and certain other measures. The Consent Decree also stipulates that Alpha will pay $27,500 in civil penalties, to be divided among the federal government and state agencies. The Consent Decree is not effective until it is entered by the Court after expiration of a public comment period.
Nicewonder Litigation
 
In December 2004, prior to the Company’s acquisition of Nicewonder in October 2005, the Affiliated Construction Trades Foundation (“ACTF”), a division of the West Virginia State Building and Construction Trades Council, brought an action against the West Virginia Department of Transportation, Division of Highways (“WVDOH”) and Nicewonder Contracting, Inc. (“NCI”), which became the Company’s wholly-owned indirect subsidiary as a result of the Nicewonder acquisition, in the United States District Court in the Southern District of West Virginia. The plaintiff sought a declaration that the contract between NCI and the State of West Virginia related to NCI’s road construction project was illegal as a violation of applicable West Virginia and federal competitive bidding and prevailing wage laws and sought to enjoin performance of the contract, but did not seek monetary damages.
 
On September 30, 2009, the District Court issued an order that dismissed or denied for lack of standing all of the plaintiff’s claims under federal law and remanded the remaining state claims to the Circuit Court of Kanawha County, West Virginia for resolution. On May 7, 2010, the Circuit Court of Kanawha County entered summary judgment in favor of NCI. On June 22, 2011, the West Virginia Supreme Court of Appeals reversed the Circuit Court order granting summary judgment in favor of NCI, and remanded the case back to the Circuit Court for further proceedings. Following remand, ACTF filed a motion for summary judgment, which the Circuit Court denied on November 9, 2011. ACTF challenged the order denying its summary judgment motion to the West Virginia Supreme Court of Appeals.

On June 21, 2012, the West Virginia Supreme Court of Appeals issued an opinion finding that ACTF has standing to pursue its claims and remanded the case back to the Circuit Court of Kanawha County, West Virginia for further proceedings. NCI’s portion of the highway project under the contract is complete.

The case is now pending in the Circuit Court of Kanawha County, West Virginia. A settlement between NCI and ACTF was agreed upon in early January 2013, prior to the scheduled trial date, January 14, 2013. The Company does not expect to incur any out-of-pocket expenditures in connection with that settlement. The trial proceeded among the remaining parties.
On February 7, 2013, the Company received notice of a purported class action lawsuit against NCI filed in the Circuit Court of Mingo County, West Virginia by a former NCI employee (the “NCI Employee Litigation”). The plaintiff in the NCI Employee Litigation is represented by the same attorney who represents the plaintiff in the ACTF litigation, and the complaint’s allegations raise issues similar to those in the ACTF litigation.
On February 26, 2013, the Circuit Court of Kanawha County ruled that the contract in dispute in the ACTF litigation, as well as the awarding and implementation of the contract were in violation of West Virginia law. The Company is reviewing the

29
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

Court’s ruling and evaluating its implications in relation to the NCI Employee Litigation. The Company believes that NCI has meritorious defenses to the claims asserted in the NCI Employee Litigation.
NCI filed its answer to the complaint in the NCI Employee Litigation on March 4, 2013. On April 23, 2013, the Circuit Court of Kanawha County, West Virginia, granted NCI’s motion to transfer and entered an agreed order transferring the NCI Employee Litigation from the Circuit Court of Mingo County to the Circuit Court of Kanawha County.
On November 14, 2013, the Circuit Court of Kanawha County granted NCI’s Motion to Certify Questions of Law to the Supreme Court of Appeals of West Virginia, but on June 17, 2014, the Supreme Court declined to review the submitted questions in the absence of a more developed factual record in the lower court. Proceedings in the Circuit Court of Kanawha County, West Virginia will therefore resume.

Fluor Litigation
 
Alpha Appalachia and certain of its subsidiaries are also parties to a number of lawsuits and other legal proceedings related to certain non-coal businesses (the “Prior Business”) previously conducted by its former affiliate Fluor Corporation. These lawsuits include the Alexander-Pederson-Helig cases in which two of Alpha Appalachia’s subsidiaries, Appalachia Holding Company (“Appalachia Holding”) and DRIH Corporation (“DRIH”), were named defendants along with Fluor. In July 2011, those cases resulted in a jury award in the City of St. Louis Circuit Court in favor of the plaintiffs for $38,500 in compensatory and economic damages and $320,000 in punitive damages. The total aggregate judgment against Alpha Appalachia’s subsidiaries is $118,500.

Under the terms of the Distribution Agreement entered into by Alpha Appalachia and Fluor as of November 30, 2000 in connection with the spin-off of Fluor by Massey, Fluor agreed to indemnify Massey with respect to all such legal proceedings and assumed defense of the proceedings. Consistent with that agreement, in September 2011, Fluor submitted to the court a number of surety bonds covering the full amount of the judgments against Fluor and Alpha Appalachia’s subsidiaries in the Alexander-Pederson-Helig cases. On January 24, 2012, Fluor moved for a reduction in the surety bond amount pending appeal. The Missouri Court of Appeals granted Fluor’s motion on March 1, 2012 and reduced the amount of the surety bonds required to be submitted by the defendants collectively to $150,000, which Fluor has submitted on behalf of itself and Alpha Appalachia’s subsidiaries. On June 17, 2014, the Missouri Court of Appeals (i) affirmed the jury award of $38,500 in compensatory damages against Fluor, Appalachia Holding and DRIH, jointly and severally, as well as the award of $48,000 in punitive damages against Appalachia Holding and $32,000 against DRIH, and (ii) vacated the award of $240,000 in punitive damages against Fluor and remanded the case for a new trial solely on the amount of punitive damages as to Fluor. On July 2, 2014, the defendants filed with the Missouri Court of Appeals a petition for rehearing by the panel or rehearing en banc and an application to transfer the appeal to the Missouri Supreme Court in the event rehearing by the Court of Appeals is denied, all of which remain pending. The Company has recorded an indemnity receivable of $118,500 and has accrued a liability of $118,500, included in prepaid expenses and other current assets and accrued expenses and other current liabilities, respectively, in the Condensed Consolidated Balance Sheet at June 30, 2014.

In connection with Fluor’s sale of the Prior Business to a group of purchasers (the “Rennert Entities”) in 1994, the Rennert Entities had agreed to indemnify Fluor and its affiliates for losses and liabilities arising from the Prior Business. In late 2010, the Rennert Entities settled with the plaintiffs in the Alexander-Pederson-Helig cases without indemnifying or obtaining a release for the benefit of Fluor and Alpha Appalachia’s subsidiaries.

In January 2012, the Rennert Entities filed suit against Fluor and two of Alpha Appalachia’s subsidiaries in the United States District Court for the Eastern District of Missouri seeking return of funds previously paid by the Rennert Entities to settle personal injury and property damage claims against Fluor and Alpha Appalachia’s subsidiaries allegedly arising out of the Prior Business and a declaration of non-liability for indemnification with respect to the Alexander-Pederson-Helig cases and any future claims or judgments against Fluor and Alpha Appalachia’s subsidiaries arising out of the Prior Business. Also in January 2012, Fluor filed suit against the Rennert Entities in Missouri state court alleging various breach of contract and tort claims and seeking a declaratory judgment regarding the Rennert Entities’ indemnification obligations to Fluor and Alpha Appalachia’s subsidiaries against claims arising out of the Prior Business. On February 21, 2012, Appalachia Holding and DRIH joined Fluor as plaintiffs in this suit. At the same time, Fluor, Appalachia Holding and DRIH moved to dismiss, or in the alternative, to stay the suit pending in federal court in Missouri in favor of the Missouri state court action. On June 21, 2012, Missouri federal court stayed the case before it in favor of the suit pending in the Missouri state court.


30
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

On April 4, 2012, the Rennert entities moved to dismiss the Missouri state court action. On July 13, 2012, the Missouri state court scheduled an expedited hearing on the Rennert entities’ pending motions to dismiss for August 15, 2012. On October 5, 2012, the court denied the Rennert entities’ motions to dismiss each of Fluor’s and Alpha Appalachia’s subsidiaries’ claims except for one claim for contribution, which the court dismissed. All defendants answered on October 25, 2012. Discovery has commenced and is ongoing.

Harman Litigation

In December 1997, Wellmore Coal Corporation (“Wellmore”), then a subsidiary of A. T. Massey Coal Company (“A. T. Massey”), which is now a subsidiary of the Company, declared force majeure under its coal supply agreement with Harman Mining Corporation (“Harman”) and reduced the amount of coal to be purchased from Harman. In October 1998, Harman and several entities affiliated with it, as well as their ultimate sole shareholder (together “Harman plaintiffs”), sued A.T. Massey and five of its subsidiaries (the “Massey Defendants”) in the Circuit Court of Boone County, West Virginia, alleging that the Massey Defendants tortiously interfered with Wellmore’s agreement with Harman, causing Harman to go out of business. In August 2002, the jury awarded the plaintiffs $50,000 in compensatory and punitive damages.

In October 2006, the Massey Defendants appealed the case to the Supreme Court of Appeals of West Virginia (“WV Supreme Court”). In November 2007, the WV Supreme Court issued a 3-2 majority opinion reversing the judgment against the Massey Defendants and remanding the case to the Circuit Court of Boone County with directions to enter an order dismissing the case, with prejudice, in its entirety.  On motion by the Harman plaintiffs, the WV Supreme Court agreed to rehear the case but, in April 2008, it again reversed the judgment against the Massey Defendants and remanded the case with direction to enter an order dismissing the case, with prejudice, in its entirety.

In July 2008, the Harman plaintiffs petitioned the United States Supreme Court (the “U.S. Supreme Court”) to review the WV Supreme Court’s dismissal of their claims. In December 2008, the U.S. Supreme Court agreed to review the case based on the question of whether a justice of the WV Supreme Court should have recused himself from the appeal. The U.S. Supreme Court found that the justice should have recused himself and ruled in June 2009 that the matter should be reheard by the WV Supreme Court.  

The WV Supreme Court heard oral arguments on the matter in September 2009, and in November 2009 reversed the lower court’s decision, ruling that all claims brought in connection with the parties dealings must be brought in Virginia. The Harman plaintiffs subsequently requested that the WV Supreme Court reconsider its decision; the WV Supreme Court denied that request.

In November 2010, Harman plaintiffs re-filed their claims in the Circuit Court of Buchanan County, Virginia, this time solely against A.T. Massey, seeking compensatory damages of approximately $44,000, plus pre- and post-judgment interest and punitive damages. A. T. Massey filed a plea of res judicata, and in December 2011 the Buchanan County Circuit Court granted the plea and dismissed the Harman plaintiffs’ claims. The Harman plaintiffs appealed that decision to the Virginia Supreme Court, and on April 18, 2013, the Virginia Supreme Court reversed the decision of the Buchanan County Circuit Court, finding that res judicata did not bar the Harman plaintiffs’ claims. The matter was remanded to the Buchanan County Circuit Court for further proceedings.

On May 23, 2014, a jury in Buchanan County Circuit Court found for the Harman plaintiffs and awarded them $5,000 in damages, plus prejudgment interest of approximately $1,120. On June 13, 2014, the Harman plaintiffs filed motions seeking a new trial on damages and attorneys’ fees, and A.T. Massey filed a motion to set aside the damages verdict.
 
Other Legal Proceedings
 
In addition to the matters disclosed above, the Company and its subsidiaries are involved in a number of legal proceedings and governmental examinations incident to its normal business activities. While the Company cannot predict the outcome of these proceedings, the Company does not believe that any liability arising from these matters individually or in the aggregate should have a material impact upon its consolidated cash flows, results of operations or financial condition.

(19)    Segment Information


31
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

The Company extracts, processes and markets steam and metallurgical coal from surface and deep mines for sale to electric utilities, steel and coke producers, and industrial customers. The Company operates only in the United States with mines in Northern and Central Appalachia and the Powder River Basin. The Company has two reportable segments: Western Coal Operations, which consists of two Powder River Basin surface mines as of June 30, 2014, and Eastern Coal Operations, which consists of 56 underground mines and 23 surface mines in Northern and Central Appalachia as of June 30, 2014, as well as coal brokerage activities.

In addition to the two reportable segments, the All Other category includes an idled underground mine in Illinois; expenses associated with certain closed mines; Dry Systems Technologies; revenues and royalties from the sale of natural gas; equipment sales and repair operations; terminal services; the leasing of mineral rights; general corporate overhead and corporate assets and liabilities. The Company evaluates the performance of its segments based on EBITDA, which the Company defines as net income (loss) plus interest expense, income tax expense, amortization of acquired intangibles, net, and depreciation, depletion and amortization, less interest income and income tax benefit.

Segment operating results and capital expenditures for the three months ended June 30, 2014 were as follows:
 
Eastern
Coal
Operations
 
Western
Coal
Operations
 
All
Other
 
Consolidated
Total revenues
$
949,110

 
$
94,858

 
$
10,130

 
$
1,054,098

Depreciation, depletion, and amortization
$
172,398

 
$
12,819

 
$
5,855

 
$
191,072

Amortization of acquired intangibles, net
$
9,908

 
$
(488
)
 
$
44

 
$
9,464

EBITDA
$
(241,558
)
 
$
(5,191
)
 
$
(4,388
)
 
$
(251,137
)
Capital expenditures
$
35,608

 
$
6,338

 
$
1,169

 
$
43,115


Segment operating results and capital expenditures for the three months ended June 30, 2013 were as follows:
 
Eastern
Coal
Operations
 
Western
Coal
Operations
 
All
Other
 
Consolidated
Total revenues
$
1,212,386

 
$
109,942

 
$
12,795

 
$
1,335,123

Depreciation, depletion, and amortization
$
194,049

 
$
13,049

 
$
7,618

 
$
214,716

Amortization of acquired intangibles, net
$
4,235

 
$
(648
)
 
$
4

 
$
3,591

EBITDA
$
42,099

 
$
17,560

 
$
(56,706
)
 
$
2,953

Capital expenditures
$
60,375

 
$
1,241

 
$
1,204

 
$
62,820


Segment operating results and capital expenditures for the six months ended June 30, 2014 were as follows:
 
Eastern
Coal
Operations
 
Western
Coal
Operations
 
All
Other
 
Consolidated
Total revenues
$
1,929,800

 
$
212,443

 
$
23,628

 
$
2,165,871

Depreciation, depletion, and amortization
$
353,111

 
$
26,291

 
$
11,965

 
$
391,367

Amortization of acquired intangibles, net
$
20,130

 
$
(1,475
)
 
$
88

 
$
18,743

EBITDA
$
34,919

 
$
11,199

 
$
(32,475
)
 
$
13,643

Capital expenditures
$
73,380

 
$
7,020

 
$
2,433

 
$
82,833


Segment operating results and capital expenditures for the six months ended June 30, 2013 were as follows:

32
Table of Contents
ALPHA NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in thousands except share and per share data)

 
Eastern
Coal
Operations
 
Western
Coal
Operations
 
All
Other
 
Consolidated
Total revenues
$
2,401,511

 
$
241,227

 
$
25,976

 
$
2,668,714

Depreciation, depletion, and amortization
$
410,719

 
$
27,177

 
$
15,833

 
$
453,729

Amortization of acquired intangibles, net
$
(873
)
 
$
(975
)
 
$
8

 
$
(1,840
)
EBITDA
$
170,784

 
$
43,798

 
$
(106,818
)
 
$
107,764

Capital expenditures
$
102,208

 
$
3,103

 
$
1,695

 
$
107,006



The following table presents a reconciliation of EBITDA to net loss:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
EBITDA
$
(251,137
)
 
$
2,953

 
$
13,643

 
$
107,764

Interest expense
(71,012
)
 
(60,953
)
 
(135,974
)
 
(120,354
)
Interest income
540

 
1,099

 
1,156

 
2,125

Income tax (expense) benefit
9,518

 
89,527

 
(37,040
)
 
165,885

Depreciation, depletion and amortization
(191,072
)
 
(214,716
)
 
(391,367
)
 
(453,729
)
Amortization of acquired intangibles, net
(9,464
)
 
(3,591
)
 
(18,743
)
 
1,840

Net loss
$
(512,627
)
 
$
(185,681
)
 
$
(568,325
)
 
$
(296,469
)

The following table presents total assets and goodwill as of June 30, 2014 and December 31, 2013:
 
Total Assets
 
Goodwill
 
June 30,
2014
 
December 31,
2013
 
June 30,
2014
 
December 31,
2013
Eastern Coal Operations
$
9,232,668

 
$
9,566,687

 
$
—

 
$
308,651

Western Coal Operations
627,061

 
645,175

 
—

 
—

All Other
1,561,405

 
1,587,396

 
—

 
—

Total
$
11,421,134

 
$
11,799,258

 
$
—

 
$
308,651


The Company markets produced, processed, and purchased coal to customers in the United States and in international markets. Export revenues totaled $408,013 and $871,973, or approximately 39% and 40%, respectively, of total revenues for the three and six months ended June 30, 2014, respectively. Export revenues totaled $614,096 and $1,198,693, or approximately 46% and 45%, respectively, of total revenues for the three and six months ended June 30, 2013, respectively.

(20)    Guarantor and Non-Guarantor Information

The Company has issued senior notes and convertible notes and may issue new registered debt securities (the “New Notes”) in the future that are and will be, respectively, fully and unconditionally guaranteed, jointly and severally, on a senior or subordinated, secured or unsecured basis by certain of the Company’s 100% owned subsidiaries (the “New Notes Guarantor Subsidiaries”). The Company’s Non-Guarantor Subsidiaries are comprised of ANR Receivables Funding, LLC, Gray Hawk Insurance Company, Shannon-Pocahontas Mining Company, Alpha Coal Sales International Limited, Alpha Natural Resources Singapore Private Limited, and Alpha Coal India Private Limited, which were not guarantors of the Senior Notes or the Convertible Notes and would not be guarantors of the New Notes.

As the Company’s parent company has no independent assets or operations, the guarantees are full and unconditional and joint and several, and the subsidiaries of the parent company other than the subsidiary guarantors are minor as of June 30, 2014, separate consolidated financial statements and other disclosures are not presented because management believes that such information would not be material to holders of the Senior Notes, the Convertible Notes or any New Notes or related guarantees that may be issued by the Company.

33
Table of Contents

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies. We have used the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “should” and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.
The following factors are among those that may cause actual results to differ materially from our forward-looking statements:
•
our liquidity, results of operations and financial condition;
•
sustained depressed levels or further declines in coal prices;
•
worldwide market demand for coal, electricity and steel, including demand for U.S. coal exports;
•
utilities switching to alternative energy sources such as natural gas, renewables and coal from basins where we do not operate;
•
reductions or increases in customer coal inventories and the timing of those changes;
•
our production capabilities and costs;
•
inherent risks of coal mining beyond our control, and our ability to utilize our coal assets fully and replace reserves as they are depleted;
•
changes in environmental laws and regulations, including those directly affecting our coal mining and production, and those affecting our customers’ coal usage, including potential climate change initiatives;
•
changes in safety and health laws and regulations and their implementation, and the ability to comply with those changes;
•
competition in coal markets;
•
future legislation, regulatory and court decisions and changes in regulations, governmental policies or taxes or changes in interpretation thereof;
•
global economic, capital market or political conditions, including a prolonged economic downturn in the markets in which we operate and disruptions in worldwide financial markets;
•
the outcome of pending or potential litigation or governmental investigations;
•
our relationships with, and other conditions affecting, our customers, including the inability to collect payments from our customers if their creditworthiness declines;
•
changes in, renewal or acquisition of, terms of and performance of customers under coal supply arrangements and the refusal by our customers to receive coal under agreed contract terms;
•
our ability to obtain, maintain or renew any necessary permits or rights, and our ability to mine properties due to defects in title on leasehold interests;
•
attracting and retaining key personnel and other employee workforce factors, such as labor relations;
•
the geological characteristics of the Powder River Basin, Central and Northern Appalachian coal reserves;
•
funding for and changes in postretirement benefit obligations, pension obligations, including multi-employer pension plans, and federal and state black lung obligations;
•
cybersecurity attacks or failures, threats to physical security, extreme weather conditions or other natural disasters;
•
increased costs and obligations potentially arising from the Patient Protection and Affordable Care Act;
•
reclamation and mine closure obligations;
•
our assumptions concerning economically recoverable coal reserve estimates;
•
our ability to negotiate new United Mine Workers of America (“UMWA”) wage agreements on terms acceptable to us, increased unionization of our workforce in the future, and any strikes by our workforce;

34
Table of Contents

•
disruptions in delivery or changes in pricing from third party vendors of key equipment and materials that are necessary for our operations, such as diesel fuel, steel products, explosives and tires;
•
inflationary pressures on supplies and labor and significant or rapid increases in commodity prices;
•
railroad, barge, truck and other transportation availability, performance and costs;
•
disruption in third party coal supplies;
•
our ability to integrate successfully operations that we may acquire or develop in the future, or the risk that any such integration could be more difficult, time-consuming or costly than expected;
•
the consummation of financing transactions, acquisitions or dispositions and the related effects on our business and financial position;
•
indemnification of certain obligations not being met;
•
long-lived asset impairment charges;
•
fair value of derivative instruments not accounted for as hedges that are being marked to market;
•
our substantial indebtedness and potential future indebtedness;
•
restrictive covenants and other terms in our secured credit facility and the indentures governing our outstanding debt securities;
•
our ability to obtain or renew surety bonds on acceptable terms or maintain self-bonding status;
•
certain terms of our outstanding debt securities, including conversions of some of our convertible senior debt securities, that may adversely impact our liquidity; and
•
other factors, including the other factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Risk Factors” sections of this Quarterly Report on Form 10-Q for the three months ended June 30, 2014, the Quarterly Report on Form 10-Q for the three months ended March 31, 2014, and our Annual Report on Form 10-K for the year ended December 31, 2013.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this report and the documents incorporated by reference. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

Overview

We are one of America’s premier coal suppliers, operating 81 mines and 24 coal preparation and load-out facilities as of June 30, 2014 in Northern and Central Appalachia and the Powder River Basin (“PRB”), with approximately 10,200 employees. We produce, process, and sell steam and metallurgical coal from our operations located in Virginia, West Virginia, Kentucky, Pennsylvania, and Wyoming. We also sell coal produced by others, the majority of which we process and/or blend with coal produced from our mines prior to resale, providing us with a higher overall margin for the blended product than if we had sold the coal separately.

For the three and six months ended June 30, 2014, sales of steam coal were 15.4 million tons and 32.4 million tons, respectively, and accounted for approximately 77% and 78% of our coal sales volume. Comparatively, for the three and six months ended June 30, 2013, sales of steam coal were 15.9 million tons and 33.8 million tons, respectively, and accounted for approximately 74% and 76% of our coal sales volume. For the three and six months ended June 30, 2014, sales of metallurgical coal, which generally sells at a premium over steam coal, were 4.5 million tons and 8.9 million tons, respectively, and accounted for approximately 23% and 22% of our coal sales volume. Comparatively, for the three and six months ended June 30, 2013, sales of metallurgical coal were 5.6 million tons and 10.7 million tons, respectively, and accounted for approximately 26% and 24% of our coal sales volume.

Our sales of steam coal for the three and six months ended June 30, 2014 and 2013 were made primarily to large utilities and industrial customers throughout the United States, and our sales of metallurgical coal were made primarily to steel companies in the Northeastern and Midwestern regions of the United States and in several countries in Europe, Asia and South America. For the three and six months ended June 30, 2014, approximately 39% and 40%, respectively, of our total revenues were derived from coal sales made to customers outside the United States, compared to 46% and 45%, respectively, for the three and six months ended June 30, 2013.

We have two reportable segments, Eastern Coal Operations and Western Coal Operations. Eastern Coal Operations consists of our operations in Northern and Central Appalachia and our coal brokerage activities. Western Coal Operations consists of two PRB mines in Wyoming. Our All Other category includes an idled underground mine in Illinois; expenses associated with closed mines; Dry Systems Technologies; revenues and royalties from the sale of coalbed methane and natural gas extraction;

35
Table of Contents

equipment sales and repair operations; terminal services; the leasing of mineral rights; general corporate overhead and corporate assets and liabilities.

In 2010, we entered into a 50/50 joint venture (the “Alpha Shale JV”) with Rice Drilling C LLC, a wholly owned subsidiary of Rice Drilling B LLC, in order to develop a portion of our Marcellus Shale natural gas holdings in southwest Pennsylvania. On December 6, 2013, we, Rice Drilling C LLC and Rice Energy Inc. (“Rice Energy”) entered into a transaction agreement (the “Transaction Agreement”). Pursuant to the Transaction Agreement, we agreed to transfer our 50% interest in the Alpha Shale JV to Rice Energy in exchange for total consideration of $300.0 million, consisting of $100.0 million of cash and $200.0 million of shares of Rice Energy common stock, based upon Rice Energy’s initial public offering (the “Offering”). On January 29, 2014, Rice Energy completed its Offering, and on the same date, issued approximately 9.5 million shares of common stock and paid $100.0 million in cash to us. We recognized a gain of $250.3 million. The shares of Rice Energy were subject to customary lockup provisions which expired on July 22, 2014, and we are considering the potential sale of some or all of these shares. As of June 30, 2014, the fair value of these shares was $290.0 million, which is included in other long-term assets in the Condensed Consolidated Balance Sheet.

In October and December 2013, the parties to the securities class action brought by Massey stockholders in the wake of the explosion at Massey’s Upper Big Branch mine participated in mediation. In December 2013, the parties reached agreement on all material terms of settlement, including a cash payment of $265.0 million. In February 2014, the parties reached agreement on definitive settlement documentation, subject to court approval, and on February 19, 2014, the Court entered an order preliminarily approving the settlement subject to a final determination following a settlement hearing on June 4, 2014. On February 25, 2014, pursuant to the terms of the settlement, we made an initial payment of $30.0 million into an escrow account and on June 3, 2014, we deposited the remaining $235 million of the settlement into the escrow account. On June 4, 2014, the Court entered an order approving the settlement and dismissed the class action with prejudice. In May 2014, we received approximately $70.0 million of insurance proceeds in connection with the settlement.
On March 5, 2014, we entered into a consent decree (the “Consent Decree”) with the EPA, the U.S. Department of Justice and three states regarding claims under the Clean Water Act. The Consent Decree resolves a complaint by the EPA and state agencies in Kentucky, Pennsylvania and West Virginia alleging that our mining affiliates in those states and in Tennessee and Virginia exceeded certain water discharge permit limits during the period 2006 to 2013. As part of the Consent Decree, we agreed to implement an integrated environmental management system and an expanded auditing/reporting protocol, install selenium and osmotic pressure treatment facilities at specific locations, and certain other measures. The Consent Decree also stipulates that we will pay $27.5 million in civil penalties, to be divided among the federal government and state agencies. The Consent Decree is not effective until it is entered by the Court. We expect to make capital expenditures of approximately $160.0 million over the course of the three year period from 2014 through 2016 to achieve water quality compliance under certain water discharge permits issued by the state agencies represented in the Consent Decree.
On April 23, 2014, the U.S. Mine Safety and Health Administration (“MSHA”) issued an extensive final rule revising and expanding its regulation of respirable dust in coal mines. The final rule differs in certain respects from MSHA’s October 2010 proposed rule. We are reviewing the final rule and evaluating its potential effects. Although certain provisions of the rule require compliance by August 2014, many provisions will not be effective until 2016.
On July 31, 2014, we announced that 11 surface mining operations in West Virginia are expected to be idled, along with, preparation plants and other support operations. The decision to idle these operations was made in response to persistent weakness in U.S. and overseas coal demand, depressed price levels and government regulations that are causing electric utilities to close and forego new construction of coal-fired power plants. In connection with the announcement, Worker Adjustment and Retraining Notification (WARN) Act notices were delivered by our affiliate companies,on the same date, to approximately 1,100 employees. Workforce reductions are expected to take place by mid-October 2014, following an evaluation of cost structures, including wages and benefits, as well as an assessment of forecasts for customer commitments and anticipated pricing. The mines that are subject to idling produced 4.2 million tons of thermal and metallurgical coal during the first half of 2014. Both domestic shipments and shipments to Europe from Central Appalachia are expected to be reduced significantly in connection with the idling of these operations. These actions are consistent with steps taken in the past to build a smaller but more sustainable portfolio of mining assets in a business environment that has undergone an enormous and fundamental transformation.
In addition, it has been decided to operate the Emerald longwall mine only through the second panel in district D, meaning that it will likely cease production in the second half of 2015. While this decision is expected to reduce Pittsburgh seam longwall volumes after 2015, initiatives at the Cumberland mine to increase volumes and broaden market exposure could potentially compensate for some of the margin loss from the higher-cost Emerald longwall mine.

36
Table of Contents

During the three months ended June 30, 2014, we performed an interim impairment test for our goodwill due primarily to continued weakness in the global metallurgical coal markets which indicated that the fair value of a reporting unit within our Eastern Coal Operations may have been below its carrying value. As a result, we recorded goodwill impairment expense of $308.7 million to write down the carrying value of goodwill to its estimated implied value for a reporting unit in our Eastern Coal Operations. See Note 3 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
Coal Pricing Trends, Uncertainties and Outlook
 
Metallurgical Coal
The global seaborne metallurgical coal market has shown very little improvement over the last several months as the market continues to exhibit dynamics of an oversupplied market. While the third quarter 2014 metallurgical hard coking coal benchmark remained at $120, indicating that pricing may have reached a bottom, we do not currently see an imminent catalyst to spur a meaningful pricing increase in the near term.
Increases in metallurgical coal production, primarily from Australia, continue to cause an oversupplied seaborne metallurgical coal market, with Australian year-to-date exports up through June 2014. After a reduction in the first quarter 2014 over the same period last year, Chinese import declines moderated during the second quarter, resulting in flat second quarter 2014 imports compared to the second quarter of 2013.
So far, we estimate that announcements to cut global metallurgical coal production are in the 20 million tonne range as the economics remain inadequate for many of the global producers. Furthermore, we believe many of these announced reductions have not yet taken full effect as certain mines have yet to idle or are selling their remaining inventory. We expect this situation to persist for the majority of 2014.
In our view, the European metallurgical coal market, although weak, remains stronger relative to the Pacific Basin, and we believe that we are well positioned in the long term in our natural markets in the Atlantic Basin.
Thermal Coal
While last quarter we noted that we saw potential indications of a firming market for thermal coal, recent price trends have not supported this expectation. Although domestic utility inventory levels remain well below normal, softer natural gas prices, increased imports of thermal coal, primarily from Colombia, declining usage of thermal coal by power plants in response to EPA regulations and the crossover of metallurgical coal to thermal markets have contributed to a stagnant pricing environment. In additions, sluggish electricity demand, which has stayed below 2008 levels, continues to confine coal demand.
Rail underperformance continues to hinder shipping volumes across all regions, with a greater impact in the Powder River Basin, contributing to weak and flat pricing. Utility inventory levels measured in days of coal burn are currently significantly under the five-year average as well as under the levels as of a year ago.
Competition from the Illinois basin intensified further during the quarter, contributing to lower pricing in Northern Appalachia (“NAPP”). Continued soft conditions in NAPP were exacerbated by the threat of increased production from competing mines, and natural gas prices retreating to the high $3 range. Utility inventories in NAPP measured in days of coal burn in NAPP were higher in June 2014 as compared to March 2014, but well under the levels as of June 2013.
Similarly, utility stock piles in Central Appalachia (“CAPP”) are well below normal five-year average burn levels and down significantly from a year ago. Despite this, we see no demonstrated sense of urgency from the utilities, due in part to mild weather so far this summer and natural gas injections running above expectations for the past several weeks. These factors, coupled with poor rail performance in the east, have significantly muted the CAPP thermal assessment we disclosed previously.
The seaborne market is also negative, with API2 spot pricing remaining weak at roughly $76 per tonne delivered into Northern Europe, and anticipated 2015 calendar year pricing declining over the past few months to approximately $80 per tonne, both below the breakeven point for the majority of US producers. Unless the API2 benchmark improves meaningfully, we expect US thermal export tons to decline materially in 2015 and continue to put pressure on domestic pricing.

Results of Operations

EBITDA is defined as net income (loss) plus interest expense, income tax expense, depreciation, depletion, and amortization, and amortization of acquired intangibles, net, less interest income and income tax benefit. EBITDA is not a

37
Table of Contents

financial measure recognized under accounting principles generally accepted in the United States (“GAAP”). It is used by management to measure operating performance, and management also believes it is a useful indicator of our ability to meet debt service and capital expenditure requirements. Because EBITDA is not calculated identically by all companies, our calculation may not be comparable to similarly titled measures of other companies.

The following table reconciles EBITDA to net loss, the most directly comparable GAAP measure:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2014
 
2013
 
2014
 
2013
 
(in thousands)
 
(in thousands)
Net loss
$
(512,627
)
 
$
(185,681
)
 
$
(568,325
)
 
$
(296,469
)
Interest expense
71,012

 
60,953

 
135,974

 
120,354

Interest income
(540
)
 
(1,099
)
 
(1,156
)
 
(2,125
)
Income tax expense (benefit)
(9,518
)
 
(89,527
)
 
37,040

 
(165,885
)
Depreciation, depletion and amortization
191,072

 
214,716

 
391,367

 
453,729

Amortization of acquired intangibles, net
9,464

 
3,591

 
18,743

 
(1,840
)
EBITDA
$
(251,137
)
 
$
2,953

 
$
13,643

 
$
107,764



Three Months Ended June 30, 2014 Compared to the Three Months Ended June 30, 2013

Summary

Total revenues decreased $281.0 million, or 21%, for the three months ended June 30, 2014 compared to the prior year period. The decrease in total revenues was due to decreased coal revenues of $203.9 million, decreased freight and handling revenues of $38.9 million, and decreased other revenues of $38.2 million. The decrease in coal revenues was due to lower average coal sales realization per ton and lower sales volumes for metallurgical and western steam coal. The decrease in coal revenues consisted of decreased metallurgical coal revenues of $179.6 million, or 32%, and decreased steam coal revenues of $24.3 million, or 4%. The decrease in freight and handling revenues was due primarily to a decline in export shipments and freight rates. The decrease in other revenues was due primarily to decreased revenues related to contractual settlements.

Net loss increased $326.9 million for the three months ended June 30, 2014 compared to the prior year period. The increase was largely due to a non-cash goodwill impairment charge of $308.7 million, decreased coal and other revenues discussed above and decreased income tax benefits of $80.0 million, partially offset by decreases in certain operating costs and expenses of $286.8 million, which are described below, decreased asset impairment and restructuring expenses of $8.7 million, and decreased other expense, net of $8.4 million.

The decrease in certain operating costs and expenses of $286.8 million consisted of decreased cost of coal sales of $253.5 million, or 23%, decreased depreciation, depletion and amortization expenses of $23.6 million, or 11%, and decreased other expenses of $21.1 million, or 76%, partially offset by increased selling, general and administrative expenses of $5.6 million, or 15%, and increased expenses for amortization of acquired intangibles, net of $5.9 million, or 164%.

Coal sales volumes decreased 1.7 million tons, or 8%, compared to the prior year period. The decrease in coal sales volumes was primarily due to decreases of 0.9 million tons and 1.1 million tons for western steam and metallurgical coal, respectively. The decrease in western steam coal volumes was due primarily to rail transportation difficulties and the impacts of production curtailments implemented during 2013. The decrease in metallurgical coal volumes was due primarily to lower export shipments due to weak market conditions and the impacts of production curtailments.

The consolidated average coal sales realization per ton for the three months ended June 30, 2014 was $46.23 compared to $52.10 in the prior year period, a decrease of $5.87 per ton, or 11%. The decrease was largely attributable to decreases of $14.64 per ton, or 15%, $4.01 per ton, or 6%, and $0.56 per ton, or 5%, in metallurgical, eastern steam and western steam average coal sales realization per ton, respectively. The average coal sales realization per ton for metallurgical coal and eastern steam coal was $86.31 and $58.53, respectively, for the three months ended June 30, 2014 compared to $100.95 and $62.54 in the prior year period. The average coal sales realization per ton for western steam coal was $11.81 for the three months ended June 30, 2014 compared to $12.37 in the prior year period.

38
Table of Contents


Consolidated coal margin percentage, calculated as consolidated coal revenues less consolidated cost of coal sales (excluding cost of coal sales in our All Other category), divided by consolidated coal revenues, was 11% for the three months ended June 30, 2014 compared to 5% in the prior year period. Coal margin percentage for our Eastern and Western Coal Operations was 12% and (2%), respectively, for the three months ended June 30, 2014 compared to 4% and 19% in the prior year period. Consolidated coal margin per ton, calculated as consolidated coal sales realization per ton less consolidated cost of coal sales per ton (excluding cost of coal sales per ton in our All Other category), was $4.90 for the three months ended June 30, 2014 compared to $2.72 in the prior year period. Coal margin per ton for our Eastern and Western Coal Operations was $8.30 and $(0.25), respectively, for the three months ended June 30, 2014 compared to $3.03 and $2.29 in the prior year period. The increase in coal margin percentage and coal margin per ton in Eastern Coal Operations was primarily due to the impact of production curtailments at higher cost mines and our cost reduction efforts. The decrease in coal margin percentage and coal margin per ton in Western Coal Operations was primarily due to decreased production from rail transportation difficulties and the impacts of production curtailments implemented during 2013.

 
Three Months Ended
June 30,
 
Increase (Decrease)
 
2014
 
2013
 
$ or Tons
 
%
 
(in thousands, except per ton data)
 
 
Revenues:
 
 
 
 
 
 
 
Coal revenues:
 
 
 
 
 
 
 
Eastern steam
$
438,144

 
$
447,246

 
$
(9,102
)
 
(2
)%
Western steam
93,391

 
108,633

 
(15,242
)
 
(14
)%
Metallurgical
387,718

 
567,297

 
(179,579
)
 
(32
)%
Freight and handling revenues
116,338

 
155,218

 
(38,880
)
 
(25
)%
Other revenues
18,507

 
56,729

 
(38,222
)
 
(67
)%
Total revenues
$
1,054,098

 
$
1,335,123

 
$
(281,025
)
 
(21
)%
Tons sold:
 
 
 
 
 
 
 
Eastern steam
7,486

 
7,152

 
334

 
5
 %
Western steam
7,908

 
8,785

 
(877
)
 
(10
)%
Metallurgical
4,492

 
5,620

 
(1,128
)
 
(20
)%
Total
19,886

 
21,557

 
(1,671
)
 
(8
)%
Coal sales realization per ton:
 
 
 
 
 
 
 
Eastern steam
$
58.53

 
$
62.54

 
$
(4.01
)
 
(6
)%
Western steam
$
11.81

 
$
12.37

 
$
(0.56
)
 
(5
)%
Metallurgical
$
86.31

 
$
100.95

 
$
(14.64
)
 
(15
)%
Average
$
46.23

 
$
52.10

 
$
(5.87
)
 
(11
)%

Coal revenues. Coal revenues decreased $203.9 million, or 18%, for the three months ended June 30, 2014 compared to the prior year period. The decrease in coal revenues consisted of decreases in eastern steam, western steam and metallurgical coal revenues.

Total eastern steam coal revenues decreased $9.1 million, or 2%, which consisted of decreased export coal revenues of $10.8 million, or 14%, partially offset by increased domestic coal revenues of $1.7 million compared to the prior year period. The decrease in eastern steam coal revenues was largely due to lower coal sales realization per ton. Eastern steam coal shipments increased 0.3 million tons, or 5%, which consisted of increased domestic shipments compared to the prior year period. Coal sales realization per ton for eastern steam domestic sales was $59.93 per ton compared to $63.34 per ton in the prior year period and coal sales realization per ton for eastern steam export sales was $51.84 per ton compared to $59.02 per ton in the prior year period. Coal sales realization per ton has been negatively impacted by competition from coal sourced from other basins, primarily the Illinois basin, and competition from other energy sources, primarily natural gas.

Total metallurgical coal revenues decreased $179.6 million, or 32%, which consisted of decreased export coal revenues of $153.1 million, or 39%, and decreased domestic coal revenues of $26.5 million, or 15%, compared to the prior year period. The decrease in metallurgical coal revenues was largely due to lower average coal sales realization per ton, which was impacted by

39
Table of Contents

weak market conditions as increases in supply have outpaced demand growth, particularly in the seaborne markets. Metallurgical coal shipments decreased 1.1 million tons, which consisted primarily of decreased export shipments compared to the prior year period. Coal sales realization per ton for metallurgical export sales was $79.94 per ton compared to $95.83 per ton in the prior year period and coal sales realization per ton for metallurgical domestic sales was $99.19 per ton compared to $114.79 per ton in the prior year period.

The decrease in western steam coal revenues was primarily due to decreased coal shipments primarily as a result of the impacts of rail transportation difficulties, a weather-related event at our Eagle Butte mine and a decrease of $0.56, or 5%, in average coal sales realization per ton due to customer mix and roll off of higher priced contracts year over year. Western coal sales volumes decreased 0.9 million tons compared to the prior year period.

Our sales mix of metallurgical coal and steam coal based on volume was 23% and 77%, respectively, for the three months ended June 30, 2014 compared with 26% and 74% in the prior year period. Our sales mix of metallurgical coal and steam coal based on coal revenues was 42% and 58%, respectively, for the three months ended June 30, 2014 compared with 51% and 49%, respectively, in the prior year period.

Freight and handling. Freight and handling revenues and costs were $116.3 million for the three months ended June 30, 2014, a decrease of $38.9 million, or 25%, compared to the prior year period. The decrease was primarily due to decreased export shipments and decreased freight rates compared to the prior year period.

Other. Other revenues decreased $38.2 million, or 67%, and other expenses decreased $21.1 million, or 76%, for the three months ended June 30, 2014 compared to the prior year period, resulting in a net decrease to income from operations of $17.1 million. The net decrease was due primarily to decreased revenues related to contractual settlements, partially offset by decreased expenses related to a loss on assets contributed to a joint venture in the prior year.

 
Three Months Ended
June 30,
 
Increase (Decrease)
 
2014
 
2013
 
$
 
%
 
(in thousands, except per ton data)
 
 
Cost of coal sales (exclusive of items shown separately below)
$
827,948

 
$
1,081,494

 
$
(253,546
)
 
(23
)%
Freight and handling costs
116,338

 
155,218

 
(38,880
)
 
(25
)%
Other expenses
6,691

 
27,782

 
(21,091
)
 
(76
)%
Depreciation, depletion and amortization
191,072

 
214,716

 
(23,644
)
 
(11
)%
Amortization of acquired intangibles, net
9,464

 
3,591

 
5,873

 
(164
)%
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)
43,757

 
38,139

 
5,618

 
15
 %
Asset impairment and restructuring
2,590

 
11,265

 
(8,675
)
 
(77
)%
Goodwill impairment
308,651

 
—

 
308,651

 
100
 %
Total costs and expenses
$
1,506,511

 
$
1,532,205

 
$
(25,694
)
 
(2
)%
Cost of coal sales per ton:1
 
 
 
 
 
 
 
Eastern Coal Operations
$
60.65

 
$
76.41

 
$
(15.76
)
 
(21
)%
Western Coal Operations
$
12.06

 
$
10.08

 
$
1.98

 
20
 %
Average
$
41.33

 
$
49.38

 
$
(8.05
)
 
(16
)%
EBITDA:
 
 
 
 
 
 
 
Eastern Coal Operations
$
(241,558
)
 
$
42,099

 
$
(283,657
)
 
(674
)%
Western Coal Operations
$
(5,191
)
 
$
17,560

 
$
(22,751
)
 
(130
)%
1 Cost of coal sales per ton includes only costs associated with our Eastern and Western Coal Operations.

Cost of coal sales. Cost of coal sales decreased $253.5 million, or 23%, for the three months ended June 30, 2014 compared to the prior year period. The decrease in cost of coal sales was due primarily to decreased labor and benefit expenses and decreased supplies and maintenance expenses primarily related to our cost reduction measures, decreased sales-related

40
Table of Contents

variable costs associated with decreased metallurgical and steam coal revenues, and decreased expenses related to production curtailments implemented during the first half of 2013.

Depreciation, depletion and amortization. Depreciation, depletion, and amortization decreased $23.6 million, or 11%, for the three months ended June 30, 2014 compared to the prior year period. The decrease was primarily due to decreased expense related to continued constrained capital spending and the impact of production curtailments.

Amortization of acquired intangibles, net. Amortization expense of acquired intangibles, net increased $5.9 million for the three months ended June 30, 2014 compared to the prior year period. The increase in expense for amortization of acquired intangibles, net, was primarily due to lower amortization of below-market contracts assumed in prior acquisitions due to the completion of shipments under many of the contracts assumed.

Selling, general and administrative. Selling, general and administrative expenses increased $5.6 million, or 15%, for the three months ended June 30, 2014 compared to the prior year period. The increase in selling, general and administrative expenses was due primarily to increased legal fees primarily related to a case that was settled during the period, partially offset by decreased employee-related expenses as a result of lower headcount and our cost reduction measures.

Asset impairment and restructuring. Asset impairment and restructuring expenses were $2.6 million for the three months ended June 30, 2014 and consisted of severance expenses of $1.7 million and impairment expenses of $0.9 million related to cetain other non-current assets.

Goodwill impairment. See Overview and Critical Accounting Policies, and Note 3 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Interest expense. Interest expense increased $10.1 million, or 17%, during the three months ended June 30, 2014 compared to the prior year period due primarily to the issuance of 3.75% convertible notes in May 2013, 4.875% convertible notes in December 2013 and 7.50% senior secured second lien notes in May 2014, partially offset by repurchases of a portion of outstanding 2.375% and 3.25% convertible notes, respectively.

Income taxes. Income tax benefit of $9.5 million was recorded for the three months ended June 30, 2014 on a loss before income taxes of $522.1 million. The benefit rate is lower than the federal statutory rate of 35% primarily due to the impact of a change in the valuation allowance of $87.5 million, and the impact of non-deductible goodwill impairment expense. The change in valuation allowance results from an increase in net operating losses and other deferred tax assets for which we are unable to support realization. See Note 15 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Income tax benefit of $89.5 million was recorded for the three months ended June 30, 2013 on a loss before income taxes of $275.2 million. The benefit rate is is lower than the federal statutory rate of 35% primarily due to the impact of non-deductible fines and penalties and changes in the valuation allowance, partially offset by the impact of percentage depletion allowance.

Segment EBITDA

Eastern Coal Operations - EBITDA decreased $283.7 million for the three months ended June 30, 2014 compared to the prior year period. The decrease in EBITDA was largely due to a goodwill impairment charge of $308.7 million, decreased other revenues of $35.7 million and decreased other miscellaneous income of $13.8 million, partially offset by increased coal margin per ton of $5.27, or 174%, decreased other expenses of $10.4 million and decreased asset impairment and restructuring expenses of $3.8 million. The increase in coal margin per ton was due to decreased cost of coal sales primarily due to cost reduction measures and improved performance at our lower cost longwall mines. The increase in coal margin per ton consisted of decreased cost of coal sales per ton of $15.76, or 21%, partially offset by decreased average coal sales realization per ton of $10.49, or 13%.

Western Coal Operations - EBITDA decreased $22.7 million, or 130%, for the three months ended June 30, 2014 compared to the prior year period. The decrease in EBITDA was primarily due to decreased coal margin per ton of $2.54, or 111%. The decrease in coal margin per ton consisted of decreased average coal sales realization per ton of $0.56, or 5%, and increased cost of coal sales per ton of $1.98, or 20%, which was due primarily to lower volumes related to poor rail service and a weather related event at our Eagle Butte mine.

Six Months Ended June 30, 2014 Compared to the Six Months Ended June 30, 2013

41
Table of Contents


Summary

Total revenues decreased $502.8 million, or 19%, for the six months ended June 30, 2014 compared to the prior year period. The decrease in total revenues was due to decreased coal revenues of $391.5 million, decreased freight and handling revenues of $61.8 million, and decreased other revenues of $49.5 million. The decrease in coal revenues was due primarily to lower western steam and metallurgical coal sales volumes and lower average coal sales realization per ton for eastern and western steam coal and metallurgical coal. The decrease in coal revenues consisted of decreased metallurgical coal revenues of $306.1 million and decreased steam coal revenues of $85.4 million. The decrease in freight and handling revenues was due primarily to decreased freight rates and fewer export shipments. The decrease in other revenues was due primarily to decreased revenues related to contractual settlements.

Net loss increased $271.9 million for the six months ended June 30, 2014 compared to the prior year period. The increase was largely due to decreased coal and other revenues discussed above and a goodwill impairment expense of $308.7 million, decreased income tax benefits of $202.9 million, partially offset by decreased certain operating costs and expenses, which are described below, of $420.3 million, increased other miscellaneous income, net, of $250.2 million, which includes a $250.3 million gain on exchange of our 50% interest in the Alpha Shale J.V., and decreased asset impairment and restructuring expenses of $10.3 million.

The decrease in certain operating costs and expenses of $420.3 million consisted of decreased cost of coal sales of $368.8 million, or 18%, decreased depreciation, depletion and amortization expenses of $62.4 million, or 14%, and decreased other expenses of $12.9 million, or 37%, partially offset by decreased credits to expense for amortization of acquired intangibles, net of $20.6 million and increased selling, general and administrative expenses of $3.2 million, or 4%.

Coal sales volumes decreased 3.2 million tons, or 7%, compared to the prior year period. The decrease in coal sales volumes was due to decreases of 1.4 million tons and 1.8 million tons of western steam and metallurgical coal, respectively. The decrease in western steam coal was due primarily to rail transportation difficulties; adverse weather conditions in the first quarter of 2014 and the impacts of production curtailments.The decrease in metallurgical coal volumes was due primarily to lower export shipments due to weak market conditions and the impacts of production curtailments.

The consolidated average coal sales realization per ton for the six months ended June 30, 2014 was $45.32 compared to $50.91 in the prior year period, a decrease of $5.59 per ton, or 11%. The decrease was largely attributable to decreases of $13.92 per ton, or 14%, $3.81 per ton, or 6%, and $0.67 per ton, or 5%, in metallurgical, eastern steam and western steam average coal sales realization per ton, respectively. The average coal sales realization per ton for metallurgical coal and eastern steam coal was $88.13 and $58.39, respectively, for the six months ended June 30, 2014 compared to $102.05 and $62.20 in the prior year period. The average coal sales realization per ton for western steam coal was $12.05 for the six months ended June 30, 2014 compared to $12.72 in the prior year period.

Consolidated coal margin percentage, calculated as consolidated coal revenues less consolidated cost of coal sales (excluding cost of coal sales in our All Other segment), divided by consolidated coal revenues, was 9% for each of the six months ended June 30, 2014 and 2013. Coal margin percentage for our Eastern and Western Coal Operations was 9% and 8%, respectively, for the six months ended June 30, 2014 compared to 7% and 21%, respectively, in the prior year period. Consolidated coal margin per ton, calculated as consolidated coal sales realization per ton less consolidated cost of coal sales per ton (excluding cost of coal sales per ton in our All Other segment), was $4.02 for the six months ended June 30, 2014 compared to $4.44 in the prior year period. Coal margin per ton for our Eastern and Western Coal Operations was $6.22 and $0.99, respectively, for the six months ended June 30, 2014 compared to $5.73 and $2.67 in the prior year period.


42
Table of Contents

 
Six Months Ended
June 30,
 
Increase (Decrease)
 
2014
 
2013
 
$ or Tons
 
%
 
(in thousands, except per ton data)
 
 
Revenues:
 
 
 
 
 
 
 
Coal revenues:
 
 
 
 
 
 
 
Eastern steam
$
880,005

 
$
936,290

 
$
(56,285
)
 
(6
)%
Western steam
209,176

 
238,323

 
(29,147
)
 
(12
)%
Metallurgical
782,892

 
1,088,952

 
(306,060
)
 
(28
)%
Freight and handling revenues
250,540

 
312,385

 
(61,845
)
 
(20
)%
Other revenues
43,258

 
92,764

 
(49,506
)
 
(53
)%
Total revenues
$
2,165,871

 
$
2,668,714

 
$
(502,843
)
 
(19
)%
Tons sold:
 
 
 
 
 
 
 
Eastern steam
15,071

 
15,053

 
18

 
—
 %
Western steam
17,355

 
18,738

 
(1,383
)
 
(7
)%
Metallurgical
8,883

 
10,671

 
(1,788
)
 
(17
)%
Total
41,309

 
44,462

 
(3,153
)
 
(7
)%
Coal sales realization per ton:
 
 
 
 
 
 
 
Eastern steam
$
58.39

 
$
62.20

 
$
(3.81
)
 
(6
)%
Western steam
$
12.05

 
$
12.72

 
$
(0.67
)
 
(5
)%
Metallurgical
$
88.13

 
$
102.05

 
$
(13.92
)
 
(14
)%
Average
$
45.32

 
$
50.91

 
$
(5.59
)
 
(11
)%

Coal revenues. Coal revenues decreased $391.5 million, or 17%, for the six months ended June 30, 2014 compared to the prior year period. The decrease in coal revenues consisted of decreases in eastern steam, western steam and metallurgical coal revenues.

Total eastern steam coal revenues decreased $56.3 million, or 6%, which consisted of decreased domestic coal revenues of $54.3 million, or 7%, and decreased export coal revenues of $2.0 million, or 1%, compared to the prior year period. The decrease in eastern steam coal revenues was largely due to lower coal sales realization per ton, which decreased $3.81, or 6% compared to the prior year period. Coal sales realization per ton for eastern steam domestic sales was $59.79 per ton compared to $63.14 per ton in the prior year period and coal sales realization per ton for eastern steam export sales was $52.59 per ton, compared to $58.02 per ton in the prior year period.

Total metallurgical coal revenues decreased $306.1 million, or 28%, which consisted of decreased export coal revenues of $254.4 million, or 34%, and decreased domestic coal revenues of $51.7 million, or 15%, compared to the prior year period. The decrease in metallurgical coal revenues was largely due to lower average coal sales realization per ton and lower coal sales volumes, which were impacted by weak market conditions as increases to supply have outpaced demand growth, particularly in the seaborne markets. Metallurgical coal shipments decreased 1.8 million tons, which consisted of increased domestic shipments of 0.1 million tons and decreased export shipments of 1.9 million tons compared to the prior year period. Coal sales realization per ton for metallurgical export sales was $82.54 per ton compared to $94.54 per ton in the prior year period and coal sales realization per ton for metallurgical domestic sales was $99.94 per ton, compared to $124.05 per ton in the prior year period.

The decrease in western steam coal revenues was primarily due to decreased coal shipments as a result of the impacts of rail transportation difficulties, a weather related event at our Eagle Butte mine in the second quarter of 2014, and a decrease of $0.67, or 5%, in average coal sales realization per ton due to customer mix and roll off of higher priced contracts year over year.Western coal sales volumes decreased 1.4 million tons, or 7%, compared to the prior year period.

Our sales mix of metallurgical coal and steam coal based on volume was 22% and 78%, respectively, for the six months ended June 30, 2014 compared with 24% and 76% in the prior year period. Our sales mix of metallurgical coal and steam coal based on coal revenues was 42% and 58%, respectively, for the six months ended June 30, 2014 compared with 48% and 52%, respectively, in the prior year period.

43
Table of Contents


Freight and handling. Freight and handling revenues and costs were $250.5 million for the six months ended June 30, 2014, a decrease of $61.8 million, or 20%, compared to the prior year period. The decrease was primarily due to decreased freight rates and fewer export shipments compared to the prior year period.

Other. Other revenues decreased $49.5 million, or 53%, and other expenses decreased $12.9 million, or 37%, for the six months ended June 30, 2014 compared to the prior year period, resulting in a net decrease to income from operations of $36.6 million. The net decrease was due primarily to decreased revenues and credits related to contractual settlements, partially offset by decreased expenses related to a loss on assets contributed to a joint venture in the prior year.

 
Six Months Ended
June 30,
 
Increase (Decrease)
 
2014
 
2013
 
$ or Tons
 
%
 
(in thousands, except per ton data)
 
 
Cost of coal sales (exclusive of items shown separately below)
$
1,724,532

 
$
2,093,335

 
$
(368,803
)
 
(18
)%
Freight and handling costs
250,540

 
312,385

 
(61,845
)
 
(20
)%
Other expenses
21,885

 
34,781

 
(12,896
)
 
(37
)%
Depreciation, depletion and amortization
391,367

 
453,729

 
(62,362
)
 
(14
)%
Amortization of acquired intangibles, net
18,743

 
(1,840
)
 
20,583

 
1,119
 %
Selling, general and administrative expenses (exclusive of depreciation, depletion and amortization shown separately above)
84,954

 
81,765

 
3,189

 
4
 %
Asset impairment and restructuring
12,089

 
22,341

 
(10,252
)
 
(46
)%
Goodwill impairment
308,651

 
—

 
308,651

 
100
 %
Total costs and expenses
$
2,812,761

 
$
2,996,496

 
$
(183,735
)
 
(6
)%
Cost of coal sales per ton:1
 
 
 
 
 
 
 
Eastern coal operations
$
63.20

 
$
73.00

 
$
(9.80
)
 
(13
)%
Western coal operations
$
11.06

 
$
10.05

 
$
1.01

 
10
 %
Average
$
41.30

 
$
46.47

 
$
(5.17
)
 
(11
)%
EBITDA:
 
 
 
 
 
 
 
Eastern Coal Operations
$
34,919

 
$
170,784

 
$
(135,865
)
 
80
 %
Western Coal Operations
$
11,199

 
$
43,798

 
$
(32,599
)
 
(74
)%
1 Cost of coal sales per ton includes only costs associated with our Eastern and Western Coal Operations.

Cost of coal sales. Cost of coal sales decreased $368.8 million, or 18%, for the six months ended June 30, 2014 compared to the prior year period. The decrease in cost of coal sales was due primarily to decreased labor and benefit expenses and decreased supplies and maintenance expenses primarily related to our cost reduction measures, decreased sales-related variable costs associated with decreased metallurgical and steam coal revenues, and decreased expenses related to production curtailments implemented during the first half of 2013.

Depreciation, depletion and amortization. Depreciation, depletion, and amortization decreased $62.4 million, or 14%, for the six months ended June 30, 2014 compared to the prior year period. The decrease was primarily due to decreased depletion and amortization expense due to lower coal production and lower depletion rates at certain mines that recorded asset impairment charges during 2012 and decreased depreciation expense related to continued constrained capital spending and the impact of production curtailments.

Amortization of acquired intangibles, net. Amortization expense of acquired intangibles, net increased $20.6 million for the six months ended June 30, 2014 compared to the prior year period. The increase in expense for amortization of acquired intangibles, net, was primarily due to decreased amortization of below-market contracts assumed in the Massey Acquisition due to the completion of shipments under many of the contracts assumed.

Selling, general and administrative. Selling, general and administrative expenses increased $3.2 million, or 4%, for the six months ended June 30, 2014 compared to the prior year period. The increase in selling, general and administrative expenses

44
Table of Contents

was due primarily to increased legal fees primarily related to a case that was settled during the second quarter of 2014, partially offset by decreased employee-related expenses as a result of lower headcount and our cost reduction measures.

Asset impairment and restructuring. Asset impairment and restructuring expenses were $12.1 million for the three months ended June 30, 2014 and consisted of severance expenses of $2.4 million and impairment expenses of $9.7 million related to certain other non-current assets.

Goodwill impairment. See Overview and Critical Accounting Policies, and Note 3 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Interest expense. Interest expense increased $15.6 million, or 13%, during the six months ended June 30, 2014 compared to the prior year period due primarily to the issuance of 3.75% convertible notes in May, 2013, 4.875% convertible notes in December 2013 and 7.50% senior secured second lien notes in May 2014, partially offset by repurchases of a portion of outstanding 2.375% and 3.25% convertible notes, respectively.

Income taxes. Income tax expense of $37.0 million was recorded for the six months ended June 30, 2014 on a loss before income taxes of $531.3 million. The tax rate differs from the federal statutory rate of 35% primarily due to the impact of a change in the valuation allowance of $137.6 million and non-deductible goodwill impairment expense, partially offset by the impact of the percentage depletion allowance. The change in valuation allowance results from an increase in net operating losses and other deferred tax assets for which we are unable to support realization. See Note 15 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Income tax benefit of $165.9 million was recorded for the six months ended June 30, 2013 on a loss before income taxes of $462.4 million. The benefit rate is higher than the federal statutory rate of 35% primarily due to the impact of the percentage depletion allowance and state tax benefit, net of federal tax impact, mostly offset by the impact of non-deductible fines and penalties and changes in the valuation allowance.

Segment EBITDA

Eastern Coal Operations - EBITDA decreased $135.9 million for the six months ended June 30, 2014 compared to the prior year period. The decrease in EBITDA was largely due to a goodwill impairment charge of $308.7 million, decreased other revenues of $46.1 million, and increased other expenses of $45.9 million, partially offset by increased coal margin per ton of $0.49, or 9%, increased other miscellaneous income of $234.7 million, which includes a gain of $250.3 million from the exchange of our 50% interest in the Alpha Shale J.V., decreased selling general and administrative expenses of $18.3 million and decreased asset impairment and restructuring expenses of $10.2 million. The increase in coal margin per ton was due to decreased cost of coal sales primarily due to cost reduction measures and improved performance at one of our lower cost longwall mines. The increase in coal margin per ton consisted of decreased cost of coal sales per ton of $9.80, or 13%, partially offset by decreased average coal sales realization per ton of $9.31, or 12%.

Western Coal Operations - EBITDA decreased $32.6 million, or 74%, for the six months ended June 30, 2014 compared to the prior year period. The decrease in EBITDA was primarily due to decreased coal margin per ton of $1.68, or 63%. The decrease in coal margin per ton consisted of decreased average coal sales realization per ton of $0.67, or 5%, and increased cost of coal sales per ton of $1.01, or 10%,which was due primarily to lower volumes related to poor rail service and a weather related event at our Eagle Butte mine in the second quarter of 2014.

Liquidity and Capital Resources

Our primary liquidity and capital resource requirements stem from the cost of our coal production and purchases, our capital expenditures, our debt service, our reclamation obligations, our litigation and regulatory costs and settlements and associated costs, and from time to time, our securities repurchases. Our primary sources of liquidity have been from sales of coal, our credit facility and debt arrangements and to a lesser extent, cash from sales of non-core assets and miscellaneous revenues.

In 2010, we entered into a 50/50 joint venture (the “Alpha Shale JV”) with Rice Drilling C LLC, a wholly owned subsidiary of Rice Drilling B LLC, in order to develop a portion of our Marcellus Shale natural gas holdings in southwest Pennsylvania. On December 6, 2013, we, Rice Drilling C LLC and Rice Energy Inc. (“Rice Energy”) entered into a transaction agreement (the “Transaction Agreement”). Pursuant to the Transaction Agreement, we agreed to transfer our 50% interest in the Alpha Shale JV to Rice Energy in exchange for total consideration of $300.0 million, consisting of $100.0 million of cash and $200.0 million of shares of Rice Energy common stock, based upon Rice Energy’s initial public offering (the “Offering”). On

45
Table of Contents

January 29, 2014, Rice Energy completed its Offering, and on the same date, issued approximately 9.5 million shares of common stock and paid us $100.0 million in cash. We recognized a gain of $250.3 million. The shares of Rice Energy were subject to customary lockup provisions which expired on July 22, 2014, and we are considering the potential sale of some or all of these shares. As of June 30, 2014, the fair value of these shares was $290.0 million, which is included in other long-term assets in the Condensed Consolidated Balance Sheet.
We believe that cash on hand, cash generated from our operations and borrowing capacity available under our Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”), will be sufficient to meet our working capital requirements, anticipated capital expenditures, debt service requirements, reclamation obligations, potential securities repurchases, and expected settlements and costs related to outstanding litigation for at least the next twelve months.

At June 30, 2014, we had total liquidity of $2,395.4 million, including cash and cash equivalents of $768.5 million, marketable securities of $660.0 million which include the Rice Energy common stock, which was subject to customary lockup provisions until July 22, 2014, and $966.9 million of unused commitments available under our revolving credit facility portion of our Credit Agreement, after giving effect to $133.1 million of letters of credit outstanding as of June 30, 2014, subject to limitations described in our credit agreement.

Weak market conditions and depressed coal prices have resulted in operating losses and decreased cash flows from operations. If market conditions do not improve, we expect our liquidity to be adversely affected. In particular, we expect a decrease in cash and cash equivalents to the extent that capital expenditures and other cash obligations exceed cash generated from our operations.

We have worked and are working to enhance our capital structure and financial flexibility as opportunities arise through repayment or repurchase of outstanding debt, amendment of our credit facility, and other methods. We may decide to pursue or not pursue these opportunities at any time. As part of this strategy, we may from time to time repurchase some of our outstanding notes through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. To facilitate repurchases, we may make purchases pursuant to one or more trading plans under Rule 10b5-1 of the Exchange Act, which allow us to repurchase securities during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. Any such plans may be discontinued at any time.

We sponsor pension plans in the United States for salaried and non-union hourly employees. For these plans, the Pension Protection Act of 2006 (“PPA”) requires a funding target of 100% of the present value of accrued benefits. Generally, any such plan with a funding ratio of less than 80% will be deemed at risk and will be subject to additional funding requirements under the PPA. Annual funding contributions to the plans are made as recommended by consulting actuaries based upon the Employee Retirement Income Security Act (“ERISA”) funding standards. Plan assets consist of cash and cash equivalents, an investment in a group annuity contract, equity and fixed income funds, and private equity funds. We are required to measure plan assets and benefit obligations as of the date of our fiscal year-end balance sheet, or sooner under certain circumstances, and recognize the overfunded or underfunded status of our defined benefit pension and other postretirement plans (other than a multi-employer plan) as an asset or liability in our balance sheet and recognize changes in that funded status in the year in which the changes occur through other comprehensive income (loss). We may be required to increase the amount of cash contributions into the pension trust in order to comply with the funding requirements of the PPA. Our plans are not currently deemed to be at risk and subject to additional funding requirements under the PPA. We have not made any pension contributions during the first six months of 2014 and anticipate minimal contributions during the remainder of the year.
With respect to global economic events, there continues to be uncertainty in the financial markets and weakness in the coal industry. We constantly monitor the creditworthiness of our customers. We believe that the creditworthiness of our current group of customers is sound and represents no abnormal business risk. On May 13th, 2014, Moody’s Investors Service downgraded our ratings, including our Corporate Family Rating (CFR) to B3 from B2, the probability of default rating to B3-PD from B2-PD, and the ratings on the first lien senior secured credit facility to B1 from Ba2, and senior unsecured debt to Caa1 from B3. The speculative grade liquidity (SGL) rating remains unchanged at SGL-2. The rating outlook is stable. These issues bring potential liquidity risks for us, including the risks of declines in our stock value, declines in our cash and cash equivalents, less availability and higher costs of additional credit, restrictions to or the loss of our self-bonding capability and requests for additional collateral by surety providers, and potential counterparty defaults and failures.
In October and December 2013, the parties to the securities class action brought by Massey stockholders in the wake of the explosion at Massey’s Upper Big Branch mine participated in mediation. In December 2013, the parties reached agreement on all material terms of settlement, including a cash payment of $265.0 million. In February 2014, the parties reached agreement on definitive settlement documentation, subject to court approval, and on February 19, 2014, the Court entered an order

46
Table of Contents

preliminarily approving the settlement subject to a final determination following a settlement hearing on June 4, 2014. On February 25, 2014, pursuant to the terms of the settlement, we made an initial payment of $30.0 million into an escrow account and on June 3, 2014, we deposited the remaining $235.0 million of the settlement amount into the escrow account. On June 4, 2014, the Court entered an order approving the settlement and dismissed the class action with prejudice. In May 2014, we received approximately $70.0 million of insurance proceeds in connection with the settlement.
On March 5, 2014, we entered into a consent decree (the “Consent Decree”) with the EPA, the U.S. Department of Justice and three states regarding claims under the Clean Water Act. The Consent Decree resolves a complaint by the EPA and state agencies in Kentucky, Pennsylvania and West Virginia alleging that our mining affiliates in those states and in Tennessee and Virginia exceeded certain water discharge permit limits during the period 2006 to 2013. As part of the Consent Decree, we agreed to implement an integrated environmental management system and an expanded auditing/reporting protocol, install selenium and osmotic pressure treatment facilities at specific locations, and certain other measures. The Consent Decree also stipulates that we will pay $27.5 million in civil penalties, to be divided among the federal government and state agencies. The Consent Decree is not effective until it is entered by the Court. We expect to make capital expenditures of approximately $160.0 million over the course of the three year period from 2014 through 2016 to achieve water quality compliance under certain water discharge permits issued by the state agencies represented in the Consent Decree.
Cash Flows

Cash and cash equivalents increased by $148.9 million for the six months ended June 30, 2014. The net change in cash and cash equivalents was attributable to the following:
 
Six Months Ended
June 30,
 
2014
 
2013
Cash Flows (in thousands):
 
 
 
Net cash (used in) provided by operating activities
$
(271,009
)
 
$
67,496

Net cash used in investing activities
(18,147
)
 
(275,237
)
Net cash (used in) provided by financing activities
438,013

 
(11,019
)
Net increase (decrease) in cash and cash equivalents
$
148,857

 
$
(218,760
)

Net cash used in operating activities for the six months ended June 30, 2014 was $271.0 million compared to net cash provided by operating activities of $67.5 million for the six months ended June 30, 2013. The decrease in cash provided by operating activities in the first six months of 2014 as compared to the first six months of 2013 is primarily due to an increase in our loss from operations, the previously mentioned $195 million in net payments related to the securities class action settlement, and changes in working capital.

Net cash used in investing activities for the six months ended June 30, 2014 decreased $257.1 million from the $275.2 million of net cash used in investing activities during the six months ended June 30, 2013. The primary source of cash for investing activities for the six months ended June 30, 2014 included sales of marketable securities of $298.2 million and net proceeds of $96.7 million from the exchange of an equity method investment, which was more than offset by $82.8 million of capital expenditures and $333.5 million in purchases of marketable securities.

Net cash provided by financing activities for the six months ended June 30, 2014 was $438.0 million compared to net cash used in financing activities of $11.0 million for the six months ended June 30, 2013. The primary uses and sources of cash for financing activities for the six months ended June 30, 2014 included $500.0 million in proceeds from the issuance of our 7.50% senior secured second lien notes due 2020, $34.4 million in payments related to the repurchases of 2.375% and 3.25% convertible notes and principal repayments of long-term debt, $16.5 million in payments for debt issuance and modification costs, and capital lease principal payments of $8.6 million.

Long-Term Debt

Repurchases of 2.375% and 3.25% Convertible Senior Notes due 2015

During the three and six months ended June 30, 2014, the Company completed the repurchase of approximately $2.8 million and $21.4 million, respectively, of its outstanding 2.375% Convertible Notes and approximately $2.9 million and $19.0 million, respectively, of its outstanding 3.25% Convertible Notes and recorded a loss on early extinguishment of debt of $0.2 million and $2.0 million, respectively.

47
Table of Contents


Amendment No. 2 to the Fourth Amended and Restated Credit Agreement

On May 7, 2014, we entered into an amendment (“Amendment No. 2”) to the Fourth Amended and Restated Credit Agreement dated as of May 22, 2013, which was amended on October 2, 2013 by Amendment No. 1 thereto, (as amended, the “Credit Agreement”) with the lenders party thereto, the issuing banks party thereto, Citicorp North America, Inc., as administrative agent and as collateral agent, and all other parties thereto from time to time.  The principal changes to the Credit Agreement effected by the Amendment No. 2 to the Fourth Amended and Restated Credit Agreement include the following: suspending the interest coverage ratio until the first quarter of 2016, replacing the senior secured leverage ratio with a first lien senior secured leverage ratio, reducing the size of the restricted payment basket, extending the minimum liquidity covenant through the end of 2015, increasing by $400 million the amount of additional debt permitted to be incurred either pursuant to the “accordion” feature of the Credit Agreement or a notes offering, and requiring the first $800 million of additional debt incurred pursuant to the accordion or a notes offering (including the debt represented by the 7.50% senior secured second lien notes due 2020 issued in May 2014) to be unsecured debt or second lien secured debt.

The terms of the Credit Agreement (i) restrict our ability to make investments, loans and acquisitions, incur additional indebtedness, and pay dividends on our capital stock or redeem, repurchase or retire our capital stock; and (ii) require us to provide additional collateral consisting of receivables to secure our obligations under the Credit Agreement when not used to secure a permitted receivables facility.

Indenture and New Senior Secured Second Lien Notes

On May 20, 2014, Alpha, certain of Alpha’s wholly owned domestic subsidiaries, as guarantors (collectively, the “Guarantors”), and Wilmington Trust, National Association (“Wilmington Trust”), as trustee, entered into an indenture (the “Indenture”) governing Alpha’s newly issued 7.5% senior secured second lien notes due 2020 (the “New Secured Notes”). The New Secured Notes will pay interest semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2015, at a rate of 7.50% per year, and will mature on August 1, 2020.

The New Secured Notes are guaranteed by each of Alpha’s current and future wholly owned domestic subsidiaries that guarantee Alpha’s obligations under the Credit Agreement. The New Secured Notes are Alpha’s senior secured obligations, ranking equal in right of payment with all of Alpha’s existing and future indebtedness that is not subordinated in right of payment to the New Secured Notes; secured by a second priority lien on Alpha’s assets that secure Alpha’s indebtedness under the Credit Agreement, and thus effectively junior to Alpha’s indebtedness that is permitted to be secured by first priority liens on the collateral securing the New Secured Notes, including indebtedness under the Credit Agreement, and to indebtedness secured by assets that are not part of the collateral securing the New Secured Notes, in each case to the extent of the value of the assets securing such indebtedness; senior in right of payment to all of Alpha’s future debt that is subordinated in right of payment to the New Secured Notes; and structurally subordinated to any existing and future indebtedness and other liabilities of any non-guarantor subsidiary.

Alpha may redeem the New Secured Notes, in whole or in part, at any time prior to August 1, 2016, at a price equal to 100% of the aggregate principal amount of the New Secured Notes plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. In addition, Alpha may redeem up to 35% of the aggregate principal amount of the New Secured Notes with the net cash proceeds from certain equity offerings, at any time prior to August 1, 2016 at a redemption price equal to 107.5% of the aggregate principal amount of the New Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date if at least 65% of the aggregate principal amount of New Secured Notes issued under the Indenture remains outstanding after the redemption. Alpha may also redeem the New Secured Notes, in whole or in part, at any time on or after August 1, 2016, at the redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date.

Upon the occurrence of a change of control repurchase event with respect to the New Secured Notes, unless Alpha has exercised its right to redeem the New Secured Notes, Alpha will be required to offer to repurchase each holder’s New Secured Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The Indenture contains covenants that limit, among other things, Alpha’s ability to:

•
incur, or permit its subsidiaries to incur, additional debt;
•
issue, or permit its subsidiaries to issue, certain types of stock;
•
pay dividends on its or its subsidiaries’ capital stock or repurchase its capital stock;

48
Table of Contents

•
make certain investments;
•
enter into certain types of transactions with affiliates;
•
incur liens on certain assets to secure debt;
•
limit dividends or other payments by its restricted subsidiaries to it and its other restricted subsidiaries;
•
consolidate, merge or sell all or substantially all of its assets; and
•
make certain payments on its or its subsidiaries’ subordinated debt.

These covenants are subject to a number of important qualifications and exceptions. These covenants may not apply at any time after the New Secured Notes are assigned a credit grade rating of at least BB+ (stable) from Standard & Poor’s Ratings Services and of at least Ba1 (stable) from Moody’s Investors Service, Inc.

As of June 30, 2014, our total long-term indebtedness consisted of the following (in thousands):
 
June 30, 2014
6.25% senior notes due 2021
$
700,000

7.50% senior secured second lien notes due 2020
500,000

6.00% senior notes due 2019
800,000

9.75% senior notes due 2018
500,000

Term loan due 2020
617,188

4.875% convertible senior notes due 2020
345,000

3.75% convertible senior notes due 2017
345,000

3.25% convertible senior notes due 2015
109,201

2.375% convertible senior notes due 2015
44,458

Other
64,179

Debt discount
(134,857
)
Total long-term debt
$
3,890,169

Less current portion
(69,686
)
Long-term debt, net of current portion
$
3,820,483


Analysis of Material Debt Covenants

We were in compliance with all covenants under the Credit Agreement and the indentures governing our notes as of June 30, 2014. Operating results below current levels, or at current levels for an extended period of time, or other adverse factors could result in our being unable to comply with these covenants. A breach of the covenants in the Credit Agreement or the indentures governing our notes, including the financial covenants under the Credit Agreement that measure ratios based on Adjusted EBITDA, could result in a default under the Credit Agreement or the indentures governing our notes and the respective lenders and note holders could elect to declare all amounts borrowed due and payable. Any acceleration under either the Credit Agreement or one of the indentures governing our notes would also result in a default under the other indentures governing our notes. Additionally, under the Credit Agreement and the indentures governing our notes our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on Adjusted EBITDA.

Actual covenant levels and required levels set forth in our Credit Agreement are:
 
Actual
Covenant Levels;
Period Ended
June 30, 2014
 
Required
Covenant Levels
Maximum total senior secured debt less unrestricted cash to Adjusted EBITDA ratio (2)
(.16
)
 
2.5x

Minimum consolidated liquidity (in thousands)
$
2,105,378

 
$
300,000

Minimum Adjusted EBITDA to cash interest ratio
N/A (1)

 
N/A (1)

(1) 
Minimum Adjusted EBITDA to cash interest ratio is not applicable in 2014 or 2015 and is required to be at least 1.25x during the first two quarters of 2016.

49
Table of Contents

(2) 
Unrestricted cash is limited to a maximum of $700.0 million of cash and marketable securities that qualify as permitted investments under the terms of our Credit Agreement. The Company's shares of Rice Energy do not qualify as permitted investments.

Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash items, non-recurring items, and other adjustments permitted in calculating covenant compliance under the Credit Agreement. EBITDA, a measure used by management to evaluate its ongoing operations for internal planning and forecasting purposes, is defined as net income (loss) from operations plus interest expense, income tax expense, amortization of acquired intangibles, net and depreciation, depletion and amortization, less interest income and income tax benefit. EBITDA is a non-GAAP financial measure and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. The amounts shown for EBITDA as presented may differ from amounts calculated and may not be comparable to other similarly titled measures used by other companies.

Certain non-cash items that may adjust EBITDA in the compliance calculation are: (a) accretion of asset retirement obligations; (b) amortization of intangibles; (c) any long-term incentive plan accruals or any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors and employees; and (d) gains or losses associated with the change in fair value of derivative instruments. Certain non-recurring items that may adjust EBITDA in the compliance calculation are: (a) business optimization expenses or other restructuring charges; (b) non-cash impairment charges; (c) certain non-cash expenses or charges arising as a result of the application of acquisition accounting; (d) non-cash charges associated with loss on early extinguishment of debt; and (e) charges associated with litigation, arbitration, or contract settlements. Certain other items that may adjust EBITDA in the compliance calculation are: (a) after-tax gains or losses from discontinued operations; (b) losses from certain dispositions; (c) franchise taxes; and (d) other non-cash expenses that do not represent an accrual or reserve for future cash expense.

The calculation of Adjusted EBITDA shown below is based on our results of operations in accordance with the Credit Agreement and therefore, is different from EBITDA presented elsewhere in this Quarterly Report on Form 10-Q.
 
Three Months Ended
 
Twelve
Months
Ended
 
September 30,
2013
 
December 31,
2013
 
March 31,
2014
 
June 30,
2014
 
June 30,
2014
 
(In thousands)
 
 
Net loss
$
(458,241
)
 
$
(358,788
)
 
$
(55,698
)
 
$
(512,627
)
 
$
(1,385,354
)
Interest expense
62,233

 
64,001

 
64,962

 
71,012

 
262,208

Interest income
(1,008
)
 
(384
)
 
(616
)
 
(540
)
 
(2,548
)
Income tax expense (benefit)
(143,137
)
 
92,472

 
46,558

 
(9,518
)
 
(13,625
)
Amortization of acquired intangibles, net
2,748

 
4,148

 
9,279

 
9,464

 
25,639

Depreciation, depletion and amortization
196,292

 
215,000

 
200,295

 
191,072

 
802,659

EBITDA
$
(341,113
)
 
$
16,449

 
$
264,780

 
$
(251,137
)
 
$
(311,021
)
Non-cash charges (1) (2)
383,535

 
56,645

 
29,450

 
323,384

 
793,014

Other adjustments (1) (3) (4)
3,060

 
13,898

 
10,070

 
3,477

 
30,505

Adjusted EBITDA
$
45,482

 
$
86,992

 
$
304,300

 
$
75,724

 
$
512,498

(1) 
Calculated in accordance with the Credit Agreement.
(2) 
Includes $308.7 million for the three months ended June 30, 2014 and $253.1 million for the three months ended September 30, 2013 characterized under the Credit Agreement as goodwill impairment, which corresponds to goodwill impairment described in our Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ending December 31, 2013.
(3) 
Includes $1.7 million for the three months ended June 30, 2014, $0.7 million for the three months ended March 31, 2014, $2.9 million for the three months ended December 31, 2013, and $2.0 million for the three months ended September 30, 2013 characterized under the Credit Agreement as business optimization expenses and other restructuring charges, which corresponds to asset impairment and restructuring charges described in our Annual Report on Form 10-K for the year ending December 31, 2013 and elsewhere in this Quarterly Report on Form 10-Q.

50
Table of Contents

(4) 
The three months ended September 30, 2013 have been adjusted from amounts previously reported due to the inadvertent inclusion of certain amounts during those periods. Our covenant compliance was not impacted as a result of these adjustments.

Cash interest is calculated in accordance with the Credit Agreement and is equal to interest expense less interest income and non-cash interest expense plus pro forma interest expense. Cash interest for the twelve months ended June 30, 2014 is calculated as follows (in thousands):

Interest expense
$
262,208

Less interest income
(2,548
)
Less non-cash interest expense
(59,134
)
Plus pro forma interest
37,065

Net cash interest expense (1)
$
237,591

(1) 
Calculated in accordance with the Credit Agreement

Consolidated liquidity calculated in accordance with our Credit Agreement and is equal to the sum of all unrestricted cash and cash equivalents, certain marketable securities and unused revolving credit facility commitments available under our Credit Agreement. As of June 30, 2014, we had available liquidity of $2,105.4 million, including cash and cash equivalents of $768.5 million, marketable securities of $370.0 million and $966.9 million of unused revolving credit facility commitments available under our Credit Agreement.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain off-balance sheet arrangements. These arrangements include
guarantees, operating leases, indemnifications and financial instruments with off-balance sheet risk, such as bank letters of
credit and performance or surety bonds. Liabilities related to these arrangements are not reflected in our Condensed
Consolidated Balance Sheets. However, the underlying obligations that they secure, such as asset retirement obligations, self-insured workers’ compensation liabilities, royalty obligations and certain retiree medical obligations, are reflected in our
Condensed Consolidated Balance Sheets.

We are required to provide financial assurance in order to perform the post-mining reclamation required by our mining permits, pay our federal production royalties, pay workers’ compensation claims under self-insured workers’ compensation laws in various states, pay federal black lung benefits, pay retiree health care benefits to certain retired UMWA employees and perform certain other obligations. In order to provide the required financial assurance, we generally use surety bonds and self-bonding for post-mining reclamation and bank letters of credit for self-insured workers’ compensation obligations and UMWA retiree health care obligations. Federal black lung benefits are paid from a dedicated trust fund to which future contributions will be required. Bank letters of credit are also used to collateralize a portion of the surety bonds.

As of June 30, 2014, we had outstanding surety bonds with a total face amount of $403.4 million to secure various obligations and commitments and we had self bonding guarantees in the amount of $637.6 million. In addition, as collateral for various obligations and commitments, we had $133.1 million of letters of credit in place under our Credit Agreement. These outstanding letters of credit served as collateral for workers’ compensation bonds, reclamation surety bonds, secured UMWA retiree health care obligations, secured workers’ compensation obligations and other miscellaneous obligations. We meet frequently with our surety providers and have discussions with certain providers regarding the extent of and the terms of their participation in the program. These discussions may cause us to shift surety bonds between providers or to alter the terms of their participation in our program. In the event that our self-bonding capacity or additional surety bonds become unavailable or our surety bond providers require additional collateral, we would seek to secure our obligations with letters of credit, cash deposits or other suitable forms of collateral, which would likely require greater use of our Credit Agreement for this purpose. A failure to maintain our self-bonding status, an inability to acquire surety bonds or additional collateral requirements could result from a variety of factors, including a significant decline in our financial position (including as a result of non-cash impairments) or creditworthiness, and restrictions on the availability of collateral under our credit agreements and indentures.

Other
     
As a regular part of our business, we review opportunities for, and engage in discussions and negotiations concerning, the acquisition or disposition of coal mining and related infrastructure assets and interests in coal mining companies, and

51
Table of Contents

acquisitions or dispositions of, or combinations or other strategic transactions involving companies with coal mining or other energy assets. When we believe that these opportunities are consistent with our strategic plans and our acquisition or disposition criteria, we will make bids or proposals and/or enter into letters of intent and other similar agreements. These bids or proposals, which may be binding or nonbinding, are customarily subject to a variety of conditions and usually permit us to terminate the discussions and any related agreement if, among other things, we are not satisfied with the results of due diligence. Any acquisition opportunities we pursue could materially affect our liquidity and capital resources and may require us to incur indebtedness, seek equity capital or both. There can be no assurance that additional financing will be available on terms acceptable to us, or at all.

Contractual Obligations
 
Our contractual obligations for transportation agreements decreased $23.2 million during the six months ended June 30, 2014. Other than normal payments and servicing of our obligations, there have been no other significant changes to our contractual obligations previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

Critical Accounting Policies and Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts. These estimates and assumptions are based on information available as of the date of the financial statements. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of results that can be expected for the full year. Please refer to the section entitled “Critical Accounting Policies and Estimates” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of our critical accounting policies and estimates.

Asset Impairment. U.S. GAAP requires that a long-lived asset group that is held and used should be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset group might not be recoverable. During the three months ended June 30, 2014, we determined that indicators of impairment were present for our coal related long-lived asset groups. Testing long-lived assets for impairment after indicators of impairment have been identified is a two-step process. Step one compares the net undiscounted cash flows of an asset group to its carrying value. If the carrying value of an asset group exceeds the net undiscounted cash flows of that asset group, step two is performed whereby the fair value of the asset group is estimated and compared to its carrying amount. The amount of impairment, if any, is equal to the excess of the carrying value of an asset group over its estimated fair value. The amount of impairment, if any, is allocated to the long-lived assets on a pro-rata basis, except that the carrying value of the individual long-lived assets are not reduced below their estimated fair value. Long-lived assets located in a close geographic area are grouped together for purposes of impairment testing when, after considering revenue and cost interdependencies, circumstances indicate the assets are used together to produce future cash flows. Our asset groups generally consist of the assets and applicable liabilities of one or more mines and preparation plants and associated coal reserves for which cash flows are largely independent of cash flows of other mines, preparation plants and associated reserves.

During the three months ended June 30, 2014, we determined that the undiscounted cash flows exceeded, by a substantial margin, the carrying values of our long-lived asset groups within our Eastern and Western Coal Operations. For the one coal related long-lived asset group contained in our All Other category, the long-lived assets had previously been written down to their estimated fair value of $1.7 million during the third quarter of 2013. Our estimates of undiscounted cash flows are dependent upon a number of significant management estimates about future performance including sales volumes and prices, costs to produce, income taxes, and capital spending, among others. Changes in any of these assumptions could materially impact the estimated undiscounted cash flows of our asset groups.

Goodwill. Goodwill represents the excess of purchase price over the fair value of the identifiable net assets of acquired companies. Goodwill is not amortized; instead, it is tested for impairment annually as of October 31 of each year, or more frequently if indicators of impairment exist.

We test goodwill for impairment using a fair value approach at the reporting unit level. We perform our goodwill impairment test in two steps. Step one compares the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit determined in step one is lower than its carrying value, we proceed to step two, which compares the carrying value of goodwill to its implied fair value. In estimating the implied fair value of goodwill at a reporting unit, we assign the fair value of the reporting unit to all of the assets and liabilities associated with the reporting unit as if the reporting unit had been acquired in a business combination. Any excess of carrying value of goodwill over its implied fair value at a reporting unit is recorded as impairment.

52
Table of Contents


The valuation methodology utilized in step one to estimate the fair value of the reporting units is based on both a market and income approach and is within the range of fair values yielded under each approach. The income approach is based on a discounted cash flow methodology in which expected future net cash flows are discounted to present value, using an appropriate after-tax weighted average cost of capital (discount rate). The market approach is based on a guideline company and similar transaction methodology. Under the guideline company approach, certain operating metrics from a selected group of publicly traded guideline companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the reporting units. Under the similar transaction approach, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the Company’s reporting units.

The income approach is dependent upon a number of significant management estimates about future performance including sales volumes and prices, costs to produce, income taxes, capital spending, working capital changes and the after-tax weighted average cost of capital. Changes in any of these assumptions could materially impact the estimated fair value of our reporting units. Our forecasts of coal prices generally reflect a long-term outlook of market prices expected to be received for our coal. However, coal prices are influenced by global market conditions beyond our control. If actual coal prices are less than our expectations, it could have a material impact on the fair value of our reporting units. Our forecasts of costs to produce coal are based on our operating forecasts and an assumed inflation rate for materials and supplies such as steel, diesel fuel and explosives. However, the costs of the materials and supplies used in our production process such as steel, diesel fuel and explosives are influenced by global market conditions beyond our control. If actual costs are higher or if inflation increases above our expectations, it could have a material impact on the fair value of our reporting units. We also are faced with increasingly stringent safety standards and governmental regulation, much of which is beyond our control, which could increase our costs and materially decrease the fair value of our reporting units. For a further discussion of the factors that could result in a change in our assumptions, see “Risk Factors” in our Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission.

We performed an interim goodwill impairment test during the three months ended June 30, 2014 due primarily to continued weakness in the global metallurgical coal markets which indicated that the fair value of a reporting unit within our eastern coal operations may have been below its carrying value. As a result of our step two evaluation of the implied fair value of goodwill, we recorded goodwill impairment expense of $308.7 million to write down the carrying value of our remaining goodwill in a reporting unit within our eastern coal operations to $0. See Note 3 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Income Taxes. We recognize deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdiction in which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, taxable income available via carryback to prior years, tax planning strategies, and results of recent operations. Due to the significant negative evidence of cumulative losses in recent years, the company is unable to utilize estimates of future earnings to support the realization of its deferred tax assets. Therefore, the company is currently relying primarily on income resulting from expected future deferred tax liability reversals, along with carryback opportunities and prudent tax strategies to support the realization of deferred tax assets. We update our assessment regarding the realizability of our deferred tax assets including scheduling the reversal of our deferred tax assets and liabilities each quarter to determine the amount of valuation allowance needed. Scheduling the reversal of deferred tax asset and liability balances requires judgment and estimation. We believe the deferred tax liabilities relied upon as future taxable income in our assessment will reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets that will be realized. If our conclusions change in the future regarding the realization of a portion or all of our net deferred tax assets, we may record a change to the valuation allowance through income tax expense in the period the determination is made, which may have a material impact on our results. As of June 30, 2014, we were in a net deferred tax liability position with tax computed at regular tax rates on the gross temporary differences. Federal and state net operating loss carryforwards were partially realized by scheduling the tax effect of the taxable temporary differences. Some deferred tax liabilities did not reverse in the same period as deferred tax assets, and therefore were not used as a future source of taxable income. If deferred tax assets increase relative to our deferred tax liabilities or circumstances change regarding the reversal patterns of existing deferred balances, we may be required to establish additional valuation allowances. We recorded an increase of $87.5 million and $137.6 million to our deferred tax asset valuation allowance during the three and six months ended June 30, 2014, respectively. As of June 30, 2014, a valuation allowance of $431.7 million has been provided on federal and state net operating loss carryforwards and gross deferred tax assets not expected to provide future tax benefits.


53
Table of Contents

Item 3.
Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

We manage our commodity price risk for coal sales through the use of coal supply agreements. As of July 17, 2014, we had sales commitments for approximately 100% of planned shipments of western steam coal for 2014, all of which is priced, 97% of planned shipments of eastern steam coal for 2014, 89% of which is priced and 93% of planned shipments of metallurgical coal for 2014, 88% of which is priced. Additionally, we have planned shipments of approximately two million tons of CAPP thermal coal for the remainder of 2014 with various European customers at prices tied to the API 2 index. These market-priced contracts expose us to changes in market prices which we may seek to offset, in part or in whole, by entering into derivative instruments. As of June 30, 2014, we did not have any material hedges in place for these CAPP tons. The discussion below presents the sensitivity of the market value of selected financial instruments to selected changes in market rates and prices. The range of changes reflects our view of changes that are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates and prices chosen.
We have exposure to price risk for supplies that are used directly or indirectly in the normal course of production such as diesel fuel, steel and other items such as explosives. We manage our risk for these items through strategic sourcing contracts in normal quantities with our suppliers and may use derivative instruments from time to time, primarily swap contracts with financial institutions, for a certain percentage of our monthly requirements. Swap agreements essentially fix the price paid for our diesel fuel by requiring us to pay a fixed price and receive a floating price.

We expect to use approximately 27.4 million gallons of diesel fuel for the last six months of 2014 and 46.7 million gallons of diesel fuel for 2015. Through our derivative swap contracts, we have fixed prices for approximately 38% and 41% of our expected diesel fuel needs for the remaining six months of 2014 and for the year of 2015, respectively. If the price of diesel fuel were to decrease during the remaining six months of 2014, our expense resulting from our diesel fuel derivative swap contracts would increase, which would be offset by a decrease in the cost of our physical diesel fuel purchases.

Credit Risk

Our credit risk is primarily with electric power generators and steel producers. Our policy is to independently evaluate each customer’s creditworthiness prior to entering into transactions and to monitor outstanding accounts receivable against established credit limits. When appropriate (as determined by our credit management function), we have taken steps to reduce our credit exposure to customers that do not meet our credit standards or whose credit has deteriorated. These steps include obtaining letters of credit or cash collateral, requiring prepayments for shipments or establishing customer trust accounts held for our benefit in the event of a failure to pay.

Interest Rate Risk

We have exposure to changes in interest rates through our Credit Agreement, which has a variable interest rate at LIBOR plus a margin of 2.75% (subject to LIBOR floor of 0.75%), subject, in the case of the revolving credit line, to adjustment based on leverage ratios. As of June 30, 2014, our term loan due 2020 under the Credit Agreement had an outstanding balance of $617.2 million. A 50 basis point increase or decrease in interest rates would increase or decrease our annual interest expense by $3.1 million.

Item 4.
Controls and Procedures

Our Disclosure Committee has responsibility for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in our SEC reports is timely recorded, processed, summarized and reported. In addition, we have established a Code of Business Ethics designed to provide a statement of the values and ethical standards to which we require our employees and directors to adhere. The Code of Business Ethics provides the framework for maintaining the highest possible standards of professional conduct. We also maintain an ethics hotline for use by employees, vendors and others. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report. Based upon that

54
Table of Contents

evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, in ensuring that material information relating to Alpha Natural Resources, Inc., required to be disclosed in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the requisite time periods and is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

There have not been any significant changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.
Legal Proceedings

For a description of the Company’s legal proceedings, see Note 18, part (d), to the unaudited Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A.
Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in the “Risk Factors” sections in the Annual Report on Form 10-K for the year ended December 31, 2013, together with the cautionary statement under the caption “Cautionary Note Regarding Forward Looking Statements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. These described risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Sustained depressed levels or further declines in coal prices would reduce our revenues and adversely impact our earnings and the value of our coal reserves.

Our results of operations are substantially dependent upon the prices we receive for our coal. Those prices depend upon factors beyond our control (some of which are described in more detail in other risk factors included in our Annual Report on Form 10-K), including:

•
the demand for domestic and foreign coal, which depends significantly on the demand for electricity and steel;

•
the price and availability of natural gas and other alternative fuels;

•
competition from other suppliers of coal and other energy sources;

•
the regulatory and tax environment for our industry and those of our customers; and

•
the proximity to and availability, reliability and cost of transportation and port facilities.

Sustained depressed levels or further declines in coal prices in the United States and other countries, which have posed unprecedented challenges for coal producers, have and may continue to materially adversely affect our operating results and cash flows, as well as the value of our coal reserves. For example, because of lower prices for certain types of coal that our affiliated companies produce, over the past three years production was reduced or halted at certain mines, and we recently announced the anticipated idling of an additional 11 mines in West Virginia, as well as preparation plants and other support operations, by mid-October 2014. Production could be further reduced in the future if coal prices remain depressed or decline further.


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds


55
Table of Contents

 
Total Number of Shares Purchased (1)
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Program (2)
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (000’s omitted) (3)
April 1, 2014 through April 30, 2014
2,804

 
$
4.31

 
—

 
500,002

May 1, 2014 through May 31, 2014
3,106

 
$
4.29

 
—

 
500,002

June 1, 2014 through June 30, 2014
26,326

 
$
3.57

 
—

 
500,002

 
32,236

 
 
 
—

 
500,002

(1) 
In November 2008, the Board of Directors authorized the Company to repurchase common shares from employees to satisfy the employees’ minimum statutory tax withholdings upon the vesting of restricted stock and performance shares. During the three months ended June 30, 2014, the Company issued 131,389 shares of common stock to employees upon vesting of restricted stock and restricted stock units and repurchased 32,236 shares of common stock to satisfy the employees’ minimum statutory tax withholdings.
(2) 
On August 22, 2011, the Board of Directors authorized the company to repurchase up to $600,000,000 of common shares. Under this program, we may repurchase shares from time to time on the open market or in privately negotiated transactions, including structured or accelerated transactions, at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. To facilitate repurchases, we may make purchases pursuant to one or more trading plans under Rule 10b5-1 of the Exchange Act, which allow us to repurchase shares during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. This program may be discontinued at any time.
(3) 
Management cannot estimate the number of shares that will be repurchased because decisions to purchase are based on company outlook, business conditions and current investment opportunity. The amount of shares we may repurchase is subject to the terms governing our Credit Facility.

Item 4. Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

Item 6.
Exhibits
See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q.

56
Table of Contents

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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.
 
ALPHA NATURAL RESOURCES, INC.
Date: August 8, 2014
By:
/s/ Frank J. Wood
 
Name:
 Frank J. Wood
 
Title:
 Executive Vice President and Chief Financial Officer
        (Principal Financial and Accounting Officer)


57
Table of Contents

Exhibit No.
Description of Exhibit
3.1
Amended and Restated Certificate of Incorporation of Alpha Natural Resources, Inc. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on August 5, 2009).
 
 
 
3.2
Certificate of Amendment of the Restated Certificate of Incorporation of Alpha Natural Resources, Inc. (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on June 1, 2011).
 
 
 
3.3
Amended and Restated Bylaws of Alpha Natural Resources, Inc. (Incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on December 27, 2011).
 
 
 
4.1
Indenture, dated as of May 20, 2014, among Alpha Natural Resources, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on May 21, 2014).
 
 
 
4.2
Form of 7½% Senior Secured Second Lien Notes due 2020 (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on May 21, 2014).
 
 
 
10.1
Security Agreement, dated as of May 20, 2014, among Alpha Natural Resources, Inc., certain subsidiaries of Alpha Natural Resources, Inc. identified therein, and Wilmington Trust, National Association, as notes collateral agent (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on May 21, 2014).
 
 
 
10.2
Amendment No. 2 to Fourth Amended and Restated Credit Agreement, dated as of May 7, 2014, among Alpha Natural Resources, Inc., the lenders party thereto and Citicorp North America, Inc., as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on May 13, 2014).
 
 
 
10.3‡
Alpha Natural Resources, Inc. Amended and Restated 2012 Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Alpha Natural Resources, Inc. (File No. 001-32331) filed on May 22, 2014).
 
 
 
12.1*
Computation of Ratio of Earnings to Fixed Charges
 
 
 
12.2*
Computation of Other Ratios
 
 
 
31(a)*
Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
 
 
 
31(b)*
Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
 
 
 
32(a)*
Certification Pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
 
 
 
32(b)*
Certification Pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
 
 
 
95*
Mine Safety Disclosure Exhibit
 
 
 
101.INS*
XBRL instance document
 
 
 
101.SCH*
XBRL taxonomy extension schema
 
 
 
101.CAL*
XBRL taxonomy extension calculation linkbase
 
 
 
101.DEF*
XBRL taxonomy extension definition linkbase
 
 
 
101.LAB*
XBRL taxonomy extension label linkbase
 
 
 
101.PRE*
XBRL taxonomy extension presentation linkbase
* Filed herewith
‡ Management contract of compensatory plan or arrangement



58
ANR-2014.6.30.10QExhibit12.1
Exhibit 12.1




Alpha Natural Resources, Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(Amounts in thousands except ratio)

 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2014
 
2013
 
2014
 
2013
Earnings:
 
 
 
 
 
 
 
 
Loss before income taxes
 
$
(522,145
)
 
$
(275,208
)
 
$
(531,285
)
 
$
(462,354
)
Adjustments:
 
 
 
 
 
 
 
 
Fixed charges
 
73,034
 
 
97,806
 
 
142,394
 
 
161,561
 
Income from equity investees
 
749
 
 
14,003
 
 
884
 
 
16,787
 
Amortization of capitalized interest
 
71
 
 
87
 
 
286
 
 
177
 
Capitalized interest
 
—
 
 
—
 
 
—
 
 
(1
)
 
 
$
(448,291
)
 
$
(163,312
)
 
$
(387,721
)
 
$
(283,830
)
 
 
 
 
 
 
 
 
 
Fixed Charges:
 
 
 
 
 
 
 
 
Interest expense
 
$
71,012

 
$
60,953

 
$
135,974

 
$
120,354

Loss on early extinguishment of debt
 
218
 
 
33,197
 
 
2,022
 
 
33,197
 
Portion of rental expense representative of interest
 
1,804
 
 
3,656
 
 
4,938
 
 
8,009
 
Capitalized interest
 
—
 
 
—
 
 
—
 
 
1
 
 
 
$
73,034

 
$
97,806

 
$
142,394

 
$
161,561

 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges
 
N/A(1)
 
N/A(1)
 
N/A(1)
 
N/A(1)


(1)
The ratio of earnings to fixed charges was less than one-to-one for the three months ended June 30, 2014 and June 30, 2013, and for the six months ended June 30, 2014 and June 30, 2013. Additional earnings of $521,325, $261,118, $530,115, and $445,391 respectively, would be needed to have a one-to-one ratio of earnings to fixed charges.



ANR-2014.6.30-10QExhibit12.2


Exhibit 12.2

Alpha Natural Resources, Inc. and Subsidiaries
Computation of Other Ratios
As of June 30, 2014
(Amounts in thousands except ratios)

Total Senior Secured Debt less Unrestricted Cash to Adjusted EBITDA Ratio: The total senior secured debt to Adjusted EBITDA ratio is defined as consolidated senior secured debt less unrestricted cash divided by Adjusted EBITDA. The deduction for unrestricted cash is limited to $700 million of cash and marketable securities other than shares of Rice Energy.

Total senior secured debt less unrestricted cash
 
$
(82,812
)
 
 
 
Adjusted EBITDA (1)
 
$
512,498

 
 
 
Total senior secured debt less unrestricted cash to Adjusted EBITDA ratio
 
(0.16
)


(1) Adjusted EBITDA is defined and calculated in “Management's Discussion and Analysis of Financial Condition and Results of Operations-Analysis of Material Debt Covenants” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014.





Coal sales realization per ton: Coal sales realization per ton is defined as coal revenues divided by tons sold.

 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Coal revenues:
 
 
 
 
 
 
 
 
Eastern steam
 
$
438,144

 
$
447,246

 
$
880,005

 
$
936,290

Western steam
 
93,391

 
108,633

 
209,176

 
238,323

Metallurgical
 
387,718

 
567,297

 
782,892

 
1,088,952

Total
 
$
919,253

 
$
1,123,176

 
$
1,872,073

 
$
2,263,565

 
 
 
 
 
 
 
 
 
Tons sold:
 
 
 
 
 
 
 
 
Eastern steam
 
7,486

 
7,152

 
15,071

 
15,053

Western steam
 
7,908

 
8,785

 
17,355

 
18,738

Metallurgical
 
4,492

 
5,620

 
8,883

 
10,671

Total
 
19,886

 
21,557

 
41,309

 
44,462

 
 
 
 
 
 
 
 
 
Coal sales realization per ton:
 
 
 
 
 
 
 
 
Eastern steam
 
$
58.53

 
$
62.54

 
$
58.39

 
$
62.20

Western steam
 
$
11.81

 
$
12.37

 
$
12.05

 
$
12.72

Metallurgical
 
$
86.31

 
$
100.95

 
$
88.13

 
$
102.05

Average
 
$
46.23

 
$
52.10

 
$
45.32

 
$
50.91




ANR-2014.6.30-10QExhibit31A


EXHIBIT 31(a)

CERTIFICATIONS

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Kevin S. Crutchfield, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q (this “Report”) of Alpha Natural Resources, Inc. (the “Registrant”);
2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
4.
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d.
Disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5.
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: August 8, 2014
 
By: /s/ Kevin S. Crutchfield
Kevin S. Crutchfield
Chief Executive Officer
(Principal Executive Officer)



ANR-2014.6.30-10QExhibit31B


EXHIBIT 31(b)

CERTIFICATIONS

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Frank J. Wood, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q (this “Report”) of Alpha Natural Resources, Inc. (the “Registrant”);
2.
Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.
Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
4.
The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
d.
Disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5.
The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: August 8, 2014
 
By: /s/ Frank J. Wood
Frank J. Wood
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)



ANR-2014.6.30-10QExhibit32A


EXHIBIT 32(a)


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Alpha Natural Resources, Inc. (the “Registrant”) for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin S. Crutchfield, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 8, 2014
By: /s/ Kevin S. Crutchfield
Kevin S. Crutchfield
Chief Executive Officer
 (Principal Executive Officer)



ANR-2014.6.30-10QExhibit32B


EXHIBIT 32(b)


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Alpha Natural Resources, Inc. (the “Registrant”) for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank J. Wood, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 8, 2014
By: /s/ Frank J. Wood
Frank J. Wood
Executive Vice President and Chief Financial Officer
 (Principal Financial Officer)



ANR-2014.6.30-10QExhibit95


Exhibit 95

Mine Safety and Health Administration Data


Our subsidiaries' mining operations have consistently been recognized with numerous local, state and national awards over the years for outstanding safety performance.

Our Running Right safety process involves all employees in accident prevention and continuous improvement. Safety leadership and training programs are based upon the concepts of situational awareness and observation, changing behaviors and, most importantly, employee involvement. The core elements of our behavior-based safety training include identification of critical behaviors, frequency of those behaviors, employee feedback and removal of barriers for continuous improvement. 

The Running Right program empowers all employees to champion the safety process. Every person is challenged to identify hazards and initiate corrective actions. Reporting is anonymous, allowing hazards to be dealt with in a timely manner.

All levels of the organization are expected to be proactive and commit to perpetual improvement, implementing new safety processes that promote a safe and healthy work environment.

Our subsidiaries operate multiple mining complexes in six states and are regulated by both the U.S. Mine Safety and Health Administration (“MSHA”) and state regulatory agencies. As described in more detail in the “Environmental and Other Regulatory Matters” section of our Annual Report on Form 10-K for the year ended December 31, 2013, the Federal Mine Safety and Health Act of 1977, as amended (the “Mine Act”), among other federal and state laws and regulations, imposes stringent safety and health standards on all aspects of mining operations. Regulatory inspections are mandated by these agencies with thousands of inspection shifts at our properties each year. Citations and compliance metrics at each of our mines and coal preparation facilities vary due to the size and type of the operation. We endeavor to conduct our mining and other operations in compliance with all applicable federal, state and local laws and regulations. However, violations occur from time to time. None of the violations identified or the monetary penalties assessed upon us set forth in the tables below have been material.

































For purposes of reporting regulatory matters under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we include the following table that sets forth the total number of specific citations and orders and the total dollar value of the proposed civil penalty assessments that were issued by MSHA during the current reporting period for each of our subsidiaries that is a coal mine operator, by individual mine. None of the mines operated by our subsidiaries received written notice from MSHA during the current reporting period of a pattern of violations under Section 104(e) of the Mine Act.
MSHA Mine ID
 
Operator
 
Significant and
Substantial
Citations Issued
(Section 104 of
the Mine Act)
*Excludes 104(d)
citations/ orders
 
Failure to Abate
Orders (Section
104(b) of the
Mine Act)
 
Unwarrantable
Failure
Citations/
Orders Issued
(Section 104(d)
of the Mine Act)
 
Flagrant
Violations
(Section
110(b)(2) of the
Mine Act)
 
Imminent
Danger Orders
Issued (Section
107(a) of the
Mine Act)
 
Dollar Value of
Proposed Civil
Penalty
Assessments (in
Thousands) (1)
 
Mining Related
Fatalities
4606870
 
Alex Energy Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608787
 
Alex Energy Inc  
 
1
 
—
 
—
 
—
 
—
 
$
12.90
 
—
4608977
 
Alex Energy Inc  
 
3
 
—
 
—
 
—
 
—
 
$
2.93
 
—
4607537
 
Alex Energy Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608961
 
Alex Energy Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4800732
 
Alpha Coal West, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
4.53
 
—
4801078
 
Alpha Coal West, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3607688
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.18
 
—
3608422
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
3608497
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.75
 
—
3608620
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3608704
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3608848
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3608850
 
AMFIRE Mining Company LLC  
 
7
 
—
 
—
 
—
 
—
 
$
1.70
 
—
3609005
 
AMFIRE Mining Company LLC  
 
4
 
—
 
3
 
—
 
—
 
$
5.91
 
—
3609033
 
AMFIRE Mining Company LLC  
 
11
 
—
 
—
 
—
 
—
 
$
5.06
 
—
3609127
 
AMFIRE Mining Company LLC  
 
2
 
—
 
—
 
—
 
—
 
$
2.94
 
—
3609246
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.98
 
—
3609284
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3609414
 
Amfire Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3609648
 
AMFIRE Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3609140
 
AMFIRE Mining Company, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3609342
 
AMFIRE Mining Company, LLC  
 
3
 
—
 
—
 
—
 
—
 
$
8.05
 
—
4607897
 
Aracoma Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4608019
 
Aracoma Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609299
 
Aracoma Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.40
 
—
4609361
 
Aracoma Coal Company  
 
6
 
—
 
—
 
—
 
—
 
$
5.47
 
—
4608224
 
Aracoma Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608801
 
Aracoma Coal Company Inc  
 
19
 
—
 
—
 
—
 
—
 
$
18.27
 
—
4608802
 
Aracoma Coal Company Inc  
 
6
 
—
 
—
 
—
 
—
 
$
16.38
 
—




4605086
 
Bandmill Coal Corp  
 
5
 
—
 
—
 
—
 
—
 
$
2.08
 
—
4608263
 
Bandmill Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4605992
 
Black Castle Mining Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
1.18
 
—
4607938
 
Black Castle Mining Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
1.55
 
—
4606045
 
Brooks Run Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4606213
 
Brooks Run Mining Company LLC  
 
1
 
—
 
—
 
—
 
—
 
$
 
 
 
4608885
 
Brooks Run Mining Company LLC  
 
4
 
—
 
—
 
—
 
—
 
$
10.45
 
—
4609036
 
Brooks Run Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609133
 
Brooks Run Mining Company LLC  
 
2
 
—
 
—
 
—
 
—
 
$
2.47
 
—
4609353
 
Brooks Run Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
7.50
 
—
4609371
 
Brooks Run Mining Company, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
2.16
 
—
4606263
 
Brooks Run South Mining, LLC  
 
7
 
—
 
2
 
—
 
—
 
$
61.61
 
—
4607985
 
Brooks Run South Mining, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
1.66
 
—
4608730
 
Brooks Run South Mining, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609066
 
Brooks Run South Mining, LLC  
 
11
 
—
 
—
 
—
 
—
 
$
16.51
 
—
4609301
 
Brooks Run South Mining, LLC  
 
2
 
—
 
—
 
—
 
—
 
$
5.50
 
—
4609348
 
Brooks Run South Mining, LLC  
 
5
 
—
 
—
 
—
 
—
 
$
6.26
 
—
4609387
 
Brooks Run South Mining, LLC  
 
2
 
—
 
—
 
—
 
—
 
$
15.36
 
—
1510753
 
Clean Energy Mining Co.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1517935
 
Clean Energy Mining Co.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4603181
 
Clear Fork Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.18
 
—
1519360
 
Coalgood Energy Co  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4607484
 
Cobra Natural Resources LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
3605018
 
Cumberland Coal Resources LP  
 
26
 
—
 
2
 
—
 
—
 
$
96.09
 
—
4605649
 
Delbarton Mining Company  
 
1
 
—
 
—
 
—
 
—
 
$
2.48
 
—
4406864
 
Dickenson-Russell Coal Co LLC  
 
39
 
—
 
7
 
—
 
—
 
$
40.50
 
—
4407146
 
Dickenson-Russell Coal Co LLC  
 
2
 
—
 
—
 
—
 
—
 
$
0.26
 
—
4405311
 
Dickenson-Russell Coal Co., LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.51
 
—
4400271
 
Dickenson-Russell Coal Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4402277
 
Dickenson-Russell Coal Company, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4406444
 
Dickenson-Russell Coal Company, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609163
 
Elk Run Coal Company  
 
20
 
1
 
2
 
—
 
—
 
$
196.53
 
—




4609293
 
Elk Run Coal Company  
 
8
 
—
 
—
 
—
 
—
 
$
7.59
 
—
4606188
 
Elk Run Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.65
 
—
4607009
 
Elk Run Coal Company Inc  
 
11
 
—
 
1
 
—
 
—
 
$
10.24
 
—
4608108
 
Elk Run Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4608384
 
Elk Run Coal Company Inc  
 
8
 
—
 
—
 
—
 
—
 
$
47.15
 
—
4608402
 
Elk Run Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4608553
 
Elk Run Coal Company Inc  
 
9
 
—
 
—
 
—
 
—
 
$
73.78
 
—
3605466
 
Emerald Coal Resources LP  
 
28
 
—
 
11
 
—
 
—
 
$
42.89
 
—
1511121
 
Enterprise Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1516858
 
Enterprise Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.40
 
—
1518507
 
Enterprise Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
1519116
 
Enterprise Mining Company LLC  
 
2
 
—
 
—
 
—
 
—
 
$
3.45
 
—
3609741
 
Freeport Mining, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4605317
 
Goals Coal Company  
 
3
 
—
 
—
 
—
 
—
 
$
—
 
—
4603202
 
Green Valley Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4607950
 
Greyeagle Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4604669
 
Highland Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.30
 
—
4606558
 
Highland Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.31
 
—
4607165
 
Highland Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608789
 
Highland Mining Company  
 
2
 
—
 
—
 
—
 
—
 
$
—
 
—
4608838
 
Highland Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609204
 
Highland Mining Company  
 
4
 
—
 
—
 
—
 
—
 
$
4.21
 
—
4608645
 
Independence Coal Co.  
 
2
 
—
 
—
 
—
 
—
 
$
—
 
—
4603755
 
Independence Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608655
 
Independence Coal Company Incorporated  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4603176
 
Independence Coal Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
0.59
 
—
4608549
 
Independence Coal Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608683
 
Independence Coal Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4604637
 
Kepler Processing Company LLC  
 
5
 
—
 
1
 
—
 
—
 
$
2.48
 
—
4604343
 
Kingston Mining Inc.  
 
5
 
—
 
—
 
—
 
—
 
$
0.75
 
—
4608625
 
Kingston Mining, Inc.  
 
10
 
—
 
—
 
—
 
—
 
$
48.68
 
—
4608932
 
Kingston Mining, Inc.  
 
22
 
—
 
—
 
—
 
—
 
$
85.68
 
—
4608753
 
Kingwood Mining Company LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407281
 
Knox Creek Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4405236
 
Knox Creek Coal Corporation  
 
2
 
—
 
—
 
—
 
—
 
$
0.92
 
—




4406804
 
Knox Creek Coal Corporation  
 
6
 
—
 
—
 
—
 
—
 
$
19.67
 
—
4605872
 
Litwar Processing Company, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1505375
 
Long Fork Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4607934
 
Mammoth Coal Co  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609148
 
Mammoth Coal Co  
 
7
 
—
 
—
 
—
 
—
 
$
1.78
 
—
4603317
 
Mammoth Coal Co.  
 
—
 
—
 
—
 
—
 
—
 
$
0.40
 
—
4607968
 
Mammoth Coal Co.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608110
 
Mammoth Coal Co.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608159
 
Mammoth Coal Co.  
 
7
 
—
 
—
 
—
 
—
 
$
0.68
 
—
4609221
 
Mammoth Coal Co.  
 
—
 
—
 
—
 
—
 
—
 
$
85.56
 
—
4609237
 
Mammoth Coal Co.  
 
—
 
—
 
—
 
—
 
—
 
$
213.16
 
—
4609091
 
Marfork Coal Company  
 
31
 
—
 
—
 
—
 
—
 
$
138.01
 
—
4609092
 
Marfork Coal Company  
 
5
 
—
 
—
 
—
 
—
 
$
88.23
 
—
4609176
 
Marfork Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609376
 
Marfork Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608315
 
Marfork Coal Company Inc  
 
27
 
—
 
1
 
—
 
1
 
$
219.20
 
—
4608374
 
Marfork Coal Company Inc  
 
3
 
—
 
—
 
—
 
—
 
$
1.36
 
—
4608551
 
Marfork Coal Company Inc  
 
12
 
1
 
—
 
—
 
—
 
$
35.55
 
—
4608837
 
Marfork Coal Company Inc  
 
1
 
—
 
—
 
—
 
—
 
$
8.21
 
—
4609193
 
Marfork Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609355
 
Marfork Coal Company Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609048
 
Marfork Coal Company, Inc.  
 
20
 
—
 
2
 
—
 
—
 
$
202.86
 
—
1505106
 
Martin County Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1519235
 
Martin County Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1519615
 
Martin County Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407087
 
Mill Branch Coal Corp  
 
6
 
—
 
—
 
—
 
—
 
$
15.34
 
—
4407138
 
Mill Branch Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407150
 
Mill Branch Coal Corp  
 
10
 
—
 
—
 
—
 
—
 
$
26.13
 
—
4407262
 
Mill Branch Coal Corp  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407052
 
Mill Branch Coal Corp.  
 
18
 
—
 
—
 
—
 
—
 
$
84.04
 
—
4407186
 
Mill Branch Coal Corporation  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1519382
 
Mt. Sterling Energy Mining  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1505215
 
New Ridge Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1517165
 
North Fork Coal Corporation  
 
—
 
—
 
—
 
—
 
—
 
$
0.62
 
—
1518198
 
North Fork Coal Corporation  
 
—
 
—
 
—
 
—
 
—
 
$
0.18
 
—
1518732
 
North Fork Coal Corporation  
 
1
 
—
 
—
 
—
 
—
 
$
5.31
 
—




4608008
 
Odell Processing Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4603141
 
Omar Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407123
 
Paramont Coal Company Virginia LLC  
 
1
 
—
 
—
 
—
 
—
 
$
5.08
 
—
4407163
 
Paramont Coal Company Virginia LLC  
 
—
 
—
 
—
 
—
 
—
 
$
0.95
 
—
4407223
 
Paramont Coal Company Virginia LLC  
 
18
 
—
 
1
 
—
 
—
 
$
23.43
 
—
4407231
 
Paramont Coal Company Virginia LLC  
 
14
 
—
 
—
 
—
 
—
 
$
21.63
 
—
4407257
 
Paramont Coal Company Virginia LLC  
 
1
 
—
 
—
 
—
 
—
 
$
0.20
 
—
4405270
 
Paramont Coal Company Virginia, LLC  
 
3
 
—
 
—
 
—
 
—
 
$
0.30
 
—
4406929
 
Paramont Coal Company Virginia, LLC  
 
23
 
—
 
—
 
—
 
—
 
$
82.69
 
—
4407289
 
Paramont Coal Company Virginia, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407290
 
Paramont Coal Company Virginia, LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4407129
 
Paramont Coal Company Virginia, LLC.  
 
15
 
—
 
—
 
—
 
—
 
$
25.64
 
—
4407272
 
Paramont Coal Company Virginia, LLC.  
 
—
 
—
 
—
 
—
 
—
 
$
0.65
 
—
4602265
 
Peerless Eagle Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608155
 
Peerless Eagle Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4603430
 
Performance Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608539
 
Performance Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1504020
 
Peter Cave Mining Co.  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4403088
 
Pigeon Creek Processing Corporation  
 
3
 
—
 
—
 
—
 
—
 
$
1.20
 
—
4609026
 
Pioneer Fuel Corporation  
 
1
 
—
 
—
 
—
 
—
 
$
0.45
 
—
4609409
 
Pioneer Fuel Corporation  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4606880
 
Power Mountain Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4607545
 
Premium Energy LLC  
 
3
 
—
 
—
 
—
 
—
 
$
—
 
—
4609195
 
Premium Energy LLC  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609475
 
Republic Energy  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4609054
 
Republic Energy, Inc  
 
2
 
—
 
—
 
—
 
—
 
$
0.22
 
—
3608349
 
River Processing Corporation  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4605368
 
Road Fork Development Company Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4605121
 
Rockspring Development Inc  
 
38
 
—
 
3
 
—
 
—
 
$
202.46
 
—
4608030
 
Rockspring Development Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.40
 
—
4609089
 
Rum Creek Coal Sales  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1509724
 
Sidney Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.66
 
—




1518381
 
Sidney Coal Company Inc  
 
4
 
—
 
—
 
—
 
—
 
$
15.85
 
—
1511654
 
Sidney Coal Company, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
1519097
 
Sidney Coal Company, Inc.  
 
9
 
—
 
—
 
—
 
—
 
$
10.13
 
—
1519180
 
Sidney Coal Company, Inc.  
 
4
 
—
 
—
 
—
 
—
 
$
6.55
 
—
4609114
 
Simmons Fork Mining, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609269
 
Spartan Mining Co.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608808
 
Spartan Mining Co., Inc.  
 
12
 
—
 
—
 
—
 
—
 
$
28.65
 
—
4601544
 
Spartan Mining Company  
 
19
 
—
 
—
 
—
 
—
 
$
57.96
 
—
4609391
 
Spartan Mining Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4603933
 
Spartan Mining Company Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609238
 
Spartan Mining Company Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4609254
 
Spartan Mining Company Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4602515
 
Stirrat Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4001144
 
Tennessee Consolidated Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
0.10
 
—
4003166
 
Tennessee Consolidated Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4607273
 
Independence Coal Company Inc  
 
—
 
—
 
—
 
—
 
—
 
$
0.87
 
—
4606532
 
Trace Creek Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4403658
 
Twin Star Mining, Inc.  
 
3
 
—
 
—
 
—
 
—
 
$
2.06
 
—
4403929
 
Twin Star Mining, Inc.  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
4608365
 
White Buck Coal Company  
 
6
 
—
 
2
 
—
 
1
 
$
14.09
 
—
4609154
 
White Buck Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
6.97
 
—
4609266
 
White Buck Coal Company  
 
—
 
—
 
—
 
—
 
—
 
$
2.93
 
—
4608632
 
White Flame Energy, Inc  
 
—
 
—
 
—
 
—
 
—
 
$
—
 
—
























For purposes of reporting regulatory matters under Section 1503(a) of the Dodd-Frank Act, we include the following table that sets forth a list of legal actions pending before the Federal Mine Safety and Health Review Commission, including the Administrative Law Judges thereof, pursuant to the Mine Act, and other required information, for each of our subsidiaries that is a coal mine operator, by individual mine including legal actions and other required information.
MSHA Mine ID
 
Operator
 
MSHA
Pending
Legal
Actions (as
of last
day of
reporting
period) (2)
 
New MSHA
Dockets
commenced
during
reporting
period
 
MSHA
dockets
which
final
orders
where
entered 
(not
appealed)
during
reporting
period
 
Contests of
Citations/
Orders
referenced
in
Subpart B,
29CFR
Part 2700
 
Contests of
Proposed
Penalties
referenced
in
Subpart C,
29CFR
Part 2700
 
Complaints
for
compensation
referenced
in
Subpart D,
29CFR
Part 2700
 
Complaints
for
discharge,
discrimination,
or
interference
referenced
in
Subpart E,
29CFR
Part 2700
 
Applications
for
temporary
relief
referenced
in
Subpart F
29CFR
Part 2700
 
Appeals of
judges'
decisions
or
orders to
FMSHRC
referenced
in
Subpart H
29CFR
Part 2700
4606870
 
Alex Energy Inc  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4608787
 
Alex Energy Inc  
 
6

 
—

 
—

 
—

 
5

 
—

 
1

 
—

 
—

4608977
 
Alex Energy Inc  
 
1

 
1

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4609283
 
Alex Energy Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607537
 
Alex Energy Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608961
 
Alex Energy Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609242
 
Alex Energy Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4800732
 
Alpha Coal West, Inc.  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4801078
 
Alpha Coal West, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3607688
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3608422
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3608497
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3608620
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3608704
 
AMFIRE Mining Company LLC  
 
7

 
—

 
—

 
1

 
6

 
—

 
—

 
—

 
—

3608848
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3608850
 
AMFIRE Mining Company LLC  
 
5

 
—

 
—

 
—

 
5

 
—

 
—

 
—

 
—

3609005
 
AMFIRE Mining Company LLC  
 
6

 
2

 
2

 
—

 
6

 
—

 
—

 
—

 
—

3609033
 
AMFIRE Mining Company LLC  
 
7

 
3

 
1

 
—

 
7

 
—

 
—

 
—

 
—

3609042
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609127
 
AMFIRE Mining Company LLC  
 
4

 
2

 
1

 
—

 
4

 
—

 
—

 
—

 
—

3609246
 
AMFIRE Mining Company LLC  
 
2

 
1

 
—

 
—

 
2

 
—

 
—

 
—

 
—

3609284
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609414
 
Amfire Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609648
 
AMFIRE Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609140
 
AMFIRE Mining Company, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609342
 
AMFIRE Mining Company, LLC  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4607897
 
Aracoma Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608019
 
Aracoma Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609299
 
Aracoma Coal Company  
 
3

 
—

 
3

 
—

 
3

 
—

 
—

 
—

 
—

4609361
 
Aracoma Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608224
 
Aracoma Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608801
 
Aracoma Coal Company Inc  
 
21

 
1

 
3

 
—

 
21

 
—

 
—

 
—

 
—

4608802
 
Aracoma Coal Company Inc  
 
4

 
—

 
4

 
—

 
4

 
—

 
—

 
—

 
—

4605086
 
Bandmill Coal Corp  
 
8

 
1

 
2

 
—

 
8

 
—

 
—

 
—

 
—

4608263
 
Bandmill Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4605992
 
Black Castle Mining Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607938
 
Black Castle Mining Company, Inc.  
 
3

 
—

 
2

 
—

 
—

 
—

 
—

 
—

 
3

4609244
 
Black Castle Mining Company, Inc.  
 
2

 
—

 
10

 
—

 
2

 
—

 
—

 
—

 
—

4606045
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608218
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608885
 
Brooks Run Mining Company LLC  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4609036
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609055
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609126
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609130
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—





4609133
 
Brooks Run Mining Company LLC  
 
1

 
1

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4609134
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609247
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609351
 
Brooks Run Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609353
 
Brooks Run Mining Company LLC  
 
1

 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

4609371
 
Brooks Run Mining Company, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4606263
 
Brooks Run South Mining, LLC  
 
12

 
1

 
3

 
8

 
4

 
—

 
—

 
—

 
—

4607985
 
Brooks Run South Mining, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608730
 
Brooks Run South Mining, LLC  
 
2

 
—

 
2

 
—

 
2

 
—

 
—

 
—

 
—

4609066
 
Brooks Run South Mining, LLC  
 
6

 
1

 
—

 
1

 
5

 
—

 
—

 
—

 
—

4609301
 
Brooks Run South Mining, LLC  
 
3

 
1

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4609348
 
Brooks Run South Mining, LLC  
 
3

 
—

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4609387
 
Brooks Run South Mining, LLC  
 
5

 
2

 
—

 
2

 
3

 
—

 
—

 
—

 
—

1519446
 
Cave Spur Coal, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1510753
 
Clean Energy Mining Co.  
 
2

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

1517935
 
Clean Energy Mining Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603181
 
Clear Fork Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518423
 
Coalgood Energy Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519308
 
Coalgood Energy Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519360
 
Coalgood Energy Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607484
 
Cobra Natural Resources LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609744
 
Coral Energy Services LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3605018
 
Cumberland Coal Resources LP  
 
38

 
3

 
2

 
11

 
26

 
—

 
—

 
—

 
1

4605649
 
Delbarton Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4406864
 
Dickenson-Russell Coal Co LLC  
 
12

 
3

 
1

 
2

 
10

 
—

 
—

 
—

 
—

4407146
 
Dickenson-Russell Coal Co LLC  
 
2

 
—

 
5

 
—

 
2

 
—

 
—

 
—

 
—

4405311
 
Dickenson-Russell Coal Co., LLC  
 
4

 
2

 
1

 
—

 
4

 
—

 
—

 
—

 
—

4400271
 
Dickenson-Russell Coal Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4402277
 
Dickenson-Russell Coal Company, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4406444
 
Dickenson-Russell Coal Company, LLC  
 
3

 
—

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4607711
 
Eagle Energy Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609163
 
Elk Run Coal Company  
 
7

 
2

 
12

 
1

 
6

 
—

 
—

 
—

 
—

4609293
 
Elk Run Coal Company  
 
5

 
3

 
1

 
—

 
5

 
—

 
—

 
—

 
—

4606188
 
Elk Run Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607009
 
Elk Run Coal Company Inc  
 
2

 
—

 
6

 
—

 
2

 
—

 
—

 
—

 
—

4608108
 
Elk Run Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608384
 
Elk Run Coal Company Inc  
 
7

 
2

 
8

 
3

 
4

 
—

 
—

 
—

 
—

4608402
 
Elk Run Coal Company Inc  
 
—

 
—

 
3

 
—

 
—

 
—

 
—

 
—

 
—

4608479
 
Elk Run Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608553
 
Elk Run Coal Company Inc  
 
6

 
4

 
7

 
—

 
6

 
—

 
—

 
—

 
—

4608599
 
Elk Run Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608923
 
Elk Run Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609022
 
Elk Run Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3605466
 
Emerald Coal Resources LP  
 
30

 
12

 
—

 
8

 
16

 
—

 
2

 
—

 
4

1519189
 
Enterprise Mining Co LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1511121
 
Enterprise Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1516858
 
Enterprise Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518507
 
Enterprise Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519116
 
Enterprise Mining Company LLC  
 
3

 
2

 
4

 
—

 
3

 
—

 
—

 
—

 
—

1507082
 
Freedom Energy Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

3609741
 
Freeport Mining, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4605317
 
Goals Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603202
 
Green Valley Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4601602
 
Greyeagle Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607950
 
Greyeagle Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4405815
 
Guest Mountain Mining Corporation  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407251
 
Guest Mountain Mining Corporation  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—





4609347
 
Hazy Ridge Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603158
 
Herndon Processing Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4604669
 
Highland Mining Company  
 
2

 
—

 
1

 
—

 
2

 
—

 
—

 
—

 
—

4606558
 
Highland Mining Company  
 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

4607165
 
Highland Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608693
 
Highland Mining Company  
 
2

 
—

 
1

 
—

 
2

 
—

 
—

 
—

 
—

4608789
 
Highland Mining Company  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4608838
 
Highland Mining Company  
 
1

 
1

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4609204
 
Highland Mining Company  
 
2

 
1

 
1

 
—

 
2

 
—

 
—

 
—

 
—

4608935
 
Independence Coal  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608645
 
Independence Coal Co.  
 
3

 
—

 
—

 
1

 
2

 
—

 
—

 
—

 
—

4609328
 
Independence Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603755
 
Independence Coal Company Inc  
 
4

 
—

 
—

 
1

 
2

 
—

 
1

 
—

 
—

4607273
 
Independence Coal Company Inc  
 
12

 
—

 
4

 
—

 
12

 
—

 
—

 
—

 
—

4608700
 
Independence Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608735
 
Independence Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608844
 
Independence Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608933
 
Independence Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608655
 
Independence Coal Company Incorporated  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603176
 
Independence Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608549
 
Independence Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608683
 
Independence Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4604637
 
Kepler Processing Company LLC  
 
2

 
1

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4604343
 
Kingston Mining Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608625
 
Kingston Mining, Inc.  
 
9

 
2

 
1

 
—

 
9

 
—

 
—

 
—

 
—

4608932
 
Kingston Mining, Inc.  
 
18

 
3

 
1

 
1

 
16

 
—

 
1

 
—

 
—

4608751
 
Kingwood Mining Company LLC  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4608753
 
Kingwood Mining Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407281
 
Knox Creek Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407180
 
Knox Creek Coal Corp.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4405236
 
Knox Creek Coal Corporation  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4406804
 
Knox Creek Coal Corporation  
 
13

 
3

 
1

 
—

 
11

 
—

 
1

 
1

 
—

4605872
 
Litwar Processing Company, LLC  
 
2

 
1

 
—

 
—

 
2

 
—

 
—

 
—

 
—

1505375
 
Long Fork Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607934
 
Mammoth Coal Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609148
 
Mammoth Coal Co  
 
3

 
—

 
1

 
—

 
3

 
—

 
—

 
—

 
—

4609275
 
Mammoth Coal Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603317
 
Mammoth Coal Co.  
 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

4606051
 
Mammoth Coal Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607968
 
Mammoth Coal Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608110
 
Mammoth Coal Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608159
 
Mammoth Coal Co.  
 
2

 
—

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4609108
 
Mammoth Coal Co.  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4609221
 
Mammoth Coal Co.  
 
13

 
7

 
—

 
3

 
10

 
—

 
—

 
—

 
—

4609237
 
Mammoth Coal Co.  
 
6

 
2

 
—

 
—

 
6

 
—

 
—

 
—

 
—

4609119
 
Mammoth Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609164
 
Mammoth Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609091
 
Marfork Coal Company  
 
8

 
2

 
2

 
—

 
8

 
—

 
—

 
—

 
—

4609092
 
Marfork Coal Company  
 
9

 
2

 
1

 
—

 
9

 
—

 
—

 
—

 
—

4609176
 
Marfork Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609212
 
Marfork Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609376
 
Marfork Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608297
 
Marfork Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608315
 
Marfork Coal Company Inc  
 
10

 
4

 
4

 
2

 
8

 
—

 
—

 
—

 
—

4608374
 
Marfork Coal Company Inc  
 
2

 
—

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4608551
 
Marfork Coal Company Inc  
 
9

 
2

 
1

 
—

 
8

 
—

 
1

 
—

 
—

4608837
 
Marfork Coal Company Inc  
 
3

 
2

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4608856
 
Marfork Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609193
 
Marfork Coal Company Inc  
 
1

 
—

 
1

 
—

 
1

 
—

 
—

 
—

 
—

4609240
 
Marfork Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609355
 
Marfork Coal Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609048
 
Marfork Coal Company, Inc.  
 
11

 
2

 
1

 
—

 
10

 
—

 
1

 
—

 
—





4609090
 
Marfork Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609199
 
Marfork Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518452
 
Martin County Coal  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519193
 
Martin County Coal  
 
7

 
—

 
6

 
4

 
3

 
—

 
—

 
—

 
—

1505106
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1511005
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519235
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519472
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519553
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519595
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519615
 
Martin County Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519531
 
Martin County Coal Corp.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407170
 
Meadow Branch Mining Corporation  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4405559
 
Mill Branch Coal Corp  
 
3

 
—

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4407087
 
Mill Branch Coal Corp  
 
11

 
1

 
2

 
—

 
11

 
—

 
—

 
—

 
—

4407127
 
Mill Branch Coal Corp  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407138
 
Mill Branch Coal Corp  
 
3

 
—

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4407150
 
Mill Branch Coal Corp  
 
14

 
3

 
—

 
—

 
14

 
—

 
—

 
—

 
—

4407262
 
Mill Branch Coal Corp  
 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

4407052
 
Mill Branch Coal Corp.  
 
14

 
1

 
—

 
—

 
14

 
—

 
—

 
—

 
—

4407186
 
Mill Branch Coal Corporation  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4407189
 
Mill Branch Coal Corporation  
 
14

 
—

 
—

 
—

 
5

 
—

 
—

 
—

 
9

1519382
 
Mt. Sterling Energy Mining  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1505215
 
New Ridge Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1517165
 
North Fork Coal Corporation  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

1518198
 
North Fork Coal Corporation  
 
3

 
2

 
—

 
—

 
3

 
—

 
—

 
—

 
—

1518241
 
North Fork Coal Corporation  
 
3

 
—

 
2

 
2

 
1

 
—

 
—

 
—

 
—

1518340
 
North Fork Coal Corporation  
 
4

 
—

 
—

 
—

 
3

 
—

 
1

 
—

 
—

1518732
 
North Fork Coal Corporation  
 
7

 
2

 
—

 
—

 
7

 
—

 
—

 
—

 
—

1519418
 
North Fork Coal Corporation  
 
2

 
1

 
1

 
—

 
2

 
—

 
—

 
—

 
—

1519666
 
North Fork Coal Corporation  
 
1

 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

4608008
 
Odell Processing Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603141
 
Omar Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1516011
 
Panther Mining LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519063
 
Panther Mining, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4406949
 
Paramont Coal Company Virginia LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407123
 
Paramont Coal Company Virginia LLC  
 
5

 
—

 
3

 
2

 
2

 
—

 
—

 
—

 
1

4407163
 
Paramont Coal Company Virginia LLC  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4407190
 
Paramont Coal Company Virginia LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407223
 
Paramont Coal Company Virginia LLC  
 
10

 
5

 
1

 
2

 
8

 
—

 
—

 
—

 
—

4407231
 
Paramont Coal Company Virginia LLC  
 
7

 
2

 
2

 
—

 
7

 
—

 
—

 
—

 
—

4407257
 
Paramont Coal Company Virginia LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4405270
 
Paramont Coal Company Virginia, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4406929
 
Paramont Coal Company Virginia, LLC  
 
16

 
3

 
3

 
8

 
8

 
—

 
—

 
—

 
—

4407232
 
Paramont Coal Company Virginia, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407289
 
Paramont Coal Company Virginia, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407290
 
Paramont Coal Company Virginia, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407092
 
Paramont Coal Company Virginia, LLC.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4407129
 
Paramont Coal Company Virginia, LLC.  
 
7

 
2

 
—

 
—

 
7

 
—

 
—

 
—

 
—

4407272
 
Paramont Coal Company Virginia, LLC.  
 
2

 
2

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4602265
 
Peerless Eagle Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608155
 
Peerless Eagle Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603430
 
Performance Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608436
 
Performance Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608539
 
Performance Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—





1504020
 
Peter Cave Mining Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4403088
 
Pigeon Creek Processing Corporation  
 
3

 
1

 
—

 
—

 
3

 
—

 
—

 
—

 
—

4609026
 
Pioneer Fuel Corporation  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609409
 
Pioneer Fuel Corporation  
 
1

 
—

 
—

 
—

 
1

 
—

 
—

 
—

 
—

4606880
 
Power Mountain Coal Company  
 
3

 
—

 
1

 
—

 
3

 
—

 
—

 
—

 
—

4607545
 
Premium Energy LLC  
 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

4609054
 
Republic Energy, Inc  
 
3

 
—

 
—

 
1

 
2

 
—

 
—

 
—

 
—

3608349
 
River Processing Corporation  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609356
 
Riverside Energy Company LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608048
 
Riverside Energy Company, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609251
 
Riverside Energy Company, LLC  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519270
 
Road Fork Development Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4605368
 
Road Fork Development Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519453
 
Road Fork Development Company, Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1517651
 
Rockhouse Energy Mining  
 
2

 
—

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4605121
 
Rockspring Development Inc  
 
21

 
6

 
5

 
2

 
18

 
—

 
1

 
—

 
—

4608030
 
Rockspring Development Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609089
 
Rum Creek Coal Sales  
 
2

 
—

 
—

 
—

 
2

 
—

 
—

 
—

 
—

4609364
 
Rum Creek Coal Sales Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1509724
 
Sidney Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518378
 
Sidney Coal Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518381
 
Sidney Coal Company Inc  
 
4

 
—

 
—

 
2

 
2

 
—

 
—

 
—

 
—

1518380
 
Sidney Coal Company, Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518390
 
Sidney Coal Company, Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1511654
 
Sidney Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518950
 
Sidney Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1519097
 
Sidney Coal Company, Inc.  
 
5

 
—

 
4

 
—

 
5

 
—

 
—

 
—

 
—

1519180
 
Sidney Coal Company, Inc.  
 
5

 
—

 
2

 
—

 
5

 
—

 
—

 
—

 
—

1519247
 
Sidney Coal Company, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609114
 
Simmons Fork Mining, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1507475
 
Solid Energy Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609085
 
Spartan Mining Co dba Mammoth Coal Co  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609269
 
Spartan Mining Co.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608808
 
Spartan Mining Co., Inc.  
 
17

 
2

 
6

 
—

 
16

 
—

 
1

 
—

 
—

4601544
 
Spartan Mining Company  
 
44

 
—

 
1

 
26

 
18

 
—

 
—

 
—

 
—

4608387
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608513
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608806
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609045
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609095
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609263
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609391
 
Spartan Mining Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608738
 
Spartan Mining Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609165
 
Spartan Mining Company Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4603933
 
Spartan Mining Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609238
 
Spartan Mining Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609254
 
Spartan Mining Company Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4609270
 
Spartan Mining Company Incorporated  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

1518869
 
Stillhouse Mining, LLC
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4602515
 
Stirrat Coal Company  
 
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

4001144
 
Tennessee Consolidated Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4003166
 
Tennessee Consolidated Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4606532
 
Trace Creek Coal Company  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4607302
 
Twin Star Mining Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4403658
 
Twin Star Mining, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4403929
 
Twin Star Mining, Inc.  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

4608365
 
White Buck Coal Company  
 
6

 
1

 
7

 
—

 
6

 
—

 
—

 
—

 
—

4609154
 
White Buck Coal Company  
 
6

 
1

 
1

 
—

 
6

 
—

 
—

 
—

 
—

4609266
 
White Buck Coal Company  
 
6

 
1

 
1

 
—

 
6

 
—

 
—

 
—

 
—





4608632
 
White Flame Energy, Inc  
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—


(1) The MSHA assessments issued during the current reporting period do not necessarily relate to the citations or orders issued by MSHA during the current reporting period or to the pending cases reported herein.

(2) The Legal Actions include matters which were initiated prior to the current reporting period and which do not necessarily relate to the citations, orders or proposed assessments issued by MSHA during the current reporting period. All of the Legal Actions, except those filed under Subparts E and F of 29 CFR Part 2700, were initiated by us to contest citations, orders or proposed assessments issued by MSHA, and if we are successful, may result in reduction or dismissal of those citations, orders or assessments.




anr-20140630.xml
Attachment: XBRL INSTANCE DOCUMENT

anr-20140630.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

anr-20140630_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

anr-20140630_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

anr-20140630_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

anr-20140630_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT