INTERNATIONAL COAL GROUP, INC. 
By SCOTT DEPOT, W.Va., May 6, 2011 /PRNewswire/ -- International Coal Group, Inc. (NYSE: ICO) (the "Company") announced today that it has revised its results for the first quarter of 2011. The revision resulted from an adverse verdict issued on May 2, 2011 related to ongoing litigation with Allegheny Energy Supply. As a result of the verdict, the Company recorded a $40.0 million charge to earnings for the three months ended March 31, 2011. The revised net loss for the quarter is $6.3 million, or $0.03 per share on a diluted basis, compared to net income of $22.0 million, or $0.10 per share on a diluted basis, as previously reported in the Company's earnings release dated April 27, 2011.
Although the verdict provides damages of $104.1 million, the Company has accrued $40.0 million as of March 31, 2011 because it believes that it has meritorious factual and legal bases for reversal or revision of substantial portions of the trial court decision. The ultimate resolution of this matter could result in an outcome which may be materially different than what the Company has accrued.
General Information
ICG is a leading producer of coal in Northern and Central Appalachia and the Illinois Basin. The Company has 13 active mining complexes, of which 12 are located in Northern and Central Appalachia and one in Central Illinois. ICG's mining operations and reserves are strategically located to serve utility, metallurgical and industrial customers domestically and internationally.
Forward-Looking Statements
-- Statements in this press release that are not historical facts are
forward-looking statements within the "safe harbor" provision of the
Private Securities Litigation Reform Act of 1995 and may involve a
number of risks and uncertainties. We have used the words "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "plan,"
"predict," "project" and similar terms and phrases, including references
to assumptions, 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 various risks,
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: market demand for coal, electricity and steel; availability
of qualified workers; future economic or capital market conditions;
weather conditions or catastrophic weather-related damage; our
production capabilities; consummation of financing, acquisition or
disposition transactions and the effect thereof on our business; a
significant number of conversions of our convertible senior notes prior
to maturity; our plans and objectives for future operations and
expansion or consolidation; our relationships with, and other conditions
affecting, our customers; availability and costs of key supplies or
commodities, such as diesel fuel, steel, explosives and tires;
availability and costs of capital equipment; prices of fuels which
compete with or impact coal usage, such as oil and natural gas; timing
of reductions or increases in customer coal inventories; long-term coal
supply arrangements; reductions and/or deferrals of purchases by major
customers; risks in or related to coal mining operations, including
risks related to third-party suppliers and carriers operating at our
mines or complexes; unexpected maintenance and equipment failure;
adoption by Appalachian states of EPA guidance regarding stringent water
quality-based limitations in CWA Section 402 wastewater discharge
permits and CWA Section 404 dredge and fill permits; environmental,
safety and other laws and regulations, including those directly
affecting our coal mining and production, and those affecting our
customers' coal usage; ability to obtain and maintain all necessary
governmental permits and authorizations; competition among coal and
other energy producers in the United States and internationally;
railroad, barge, trucking and other transportation availability,
performance and costs; employee benefits costs and labor relations
issues; replacement of our reserves; our assumptions concerning
economically recoverable coal reserve estimates; availability and costs
of credit, surety bonds and letters of credit; title defects or loss of
leasehold interests in our properties which could result in
unanticipated costs or inability to mine these properties; the impact of
the mine explosion at a competitor's mine on federal and state
authorities' decisions to enact laws and regulations that result in more
frequent mine inspections, stricter enforcement practices and enhanced
reporting requirements; future legislation and changes in regulations or
governmental policies or changes in interpretations or enforcement
thereof, including with respect to safety enhancements and environmental
initiatives relating to global warming and climate change; impairment of
the value of our long-lived and deferred tax assets; our liquidity,
including our ability to adhere to financial covenants related to our
borrowing arrangements; adequacy and sufficiency of our internal
controls; and legal and administrative proceedings, settlements,
investigations and claims, including those related to citations and
orders issued by regulatory authorities, and the availability of related
insurance coverage.
-- You should keep in mind that any forward-looking statement made by us in
this press release or elsewhere speaks only as of the date on which the
statements were made. See also the "Risk Factors" in our 2010 Annual
Report on Form 10-K and subsequent filings with the Securities and
Exchange Commission, all of which are currently available on our website
at www.intlcoal.com. New risks and uncertainties arise from time to
time, and it is impossible for us to predict these events or how they
may affect us or our anticipated results. We have no duty to, and do not
intend to, update or revise the forward-looking statements in this press
release, except as may be required by law. In light of these risks and
uncertainties, you should keep in mind that any forward-looking
statement made in this press release might not occur.
INTERNATIONAL COAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(in thousands, except share and per share amounts)
Three months ended
------------------
March 31,
---------
2011 2010
---- ----
REVENUES:
Coal sales revenues $283,711 $270,490
Freight and handling revenues 7,152 9,377
Other revenues 11,126 8,727
------ -----
Total revenues 301,989 288,594
COSTS AND EXPENSES:
Cost of coal sales 217,964 220,065
Freight and handling costs 7,152 9,377
Cost of other revenues 7,342 7,181
Depreciation, depletion and
amortization 25,656 26,397
Selling, general and
administrative 51,152 8,585
Gain on sale of assets, net (6,723) (3,481)
------ ------
Total costs and expenses 302,543 268,124
------- -------
Income (loss) from operations (554) 20,470
INTEREST AND OTHER INCOME
(EXPENSE)
Loss on extinguishment of debt - (21,987)
Interest expense, net (8,110) (13,300)
------ -------
Total interest and other
income (expense) (8,110) (35,287)
------ -------
Loss before income taxes (8,664) (14,817)
INCOME TAX BENEFIT 2,357 5,965
----- -----
Net loss (6,307) (8,852)
Net income attributable to
noncontrolling interest (11) -
--- ---
Net loss attributable to
International Coal Group,
Inc. $(6,318) $(8,852)
======= =======
Other Data:
Adjusted EBITDA (a) $65,102 $46,867
Earnings per share:
Basic $(0.03) $(0.05)
Diluted $(0.03) $(0.05)
Weighted-average shares:
Basic 202,699,052 181,382,766
Diluted 202,699,052 181,382,766
This press release includes a non-GAAP financial measure within the
meaning of applicable SEC rules and regulations. Adjusted EBITDA is
a non-GAAP financial measure used by management to gauge operating
performance. We define Adjusted EBITDA as net income or loss
attributable to International Coal Group, Inc. before deducting
interest, income taxes, depreciation, depletion, amortization, legal
reserve for the Allegheny lawsuit, loss on extinguishment of debt
and noncontrolling interest. Adjusted EBITDA is not, and should not
be used as, a substitute for operating income, net income and cash
flow as determined in accordance with GAAP. We present Adjusted
EBITDA because we consider it an important supplemental measure of
our performance and believe it is frequently used by securities
analysts, investors and other interested parties in the evaluation
of companies in our industry, substantially all of which present
EBITDA or Adjusted EBITDA when reporting their results. We also use
Adjusted EBITDA as our executive compensation plan bases incentive
compensation payments on our Adjusted EBITDA performance measured
against budgets. Our ABL Loan Facility uses Adjusted EBITDA (with
additional adjustments) to measure our compliance with covenants,
such as fixed charge ratio. EBITDA or Adjusted EBITDA is also widely
used by us and others in our industry to evaluate and price
potential acquisition candidates. Adjusted EBITDA has limitations as
an analytical tool, and you should not consider it in isolation or
as a substitute for analysis of our results as reported under GAAP.
Some of these limitations are that Adjusted EBITDA does not reflect
our cash expenditures, or future requirements, for capital
expenditures or contractual commitments; changes in, or cash
requirements for, our working capital needs; interest expense, or
the cash requirements necessary to service interest or principal
payments, on our debts. Although depreciation, depletion and
amortization are non-cash charges, the assets being depreciated,
depleted and amortized will often have to be replaced in the future.
Adjusted EBITDA does not reflect any cash requirements for such
replacements. Other companies in our industry may calculate EBITDA
or Adjusted EBITDA differently than we do, limiting its usefulness
as a comparative measure. A reconciliation of Adjusted EBITDA to
GAAP net income or loss attributable to International Coal Group,
(a) Inc. appears at the end of this press release.
INTERNATIONAL COAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2011 AND DECEMBER 31, 2010
(in thousands)
March December
31, 31,
------ ---------
2011 2010
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $186,566 $215,276
Accounts receivable, net 111,210 82,557
Inventories, net 80,724 70,029
Deferred income taxes 1,420 13,563
Prepaid expenses and other 21,441 19,172
------ ------
Total current assets 401,361 400,597
PROPERTY, PLANT, EQUIPMENT AND MINE
DEVELOPMENT, net 1,051,064 1,040,118
DEBT ISSUANCE COSTS, net 8,937 11,998
ADVANCE ROYALTIES, net 21,639 16,037
OTHER NON-CURRENT ASSETS 12,008 10,947
------ ------
Total assets $1,495,009 $1,479,697
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $80,294 $78,899
Short-term debt 1,598 2,797
Current portion of long-term debt and
capital leases 103,527 17,928
Current portion of reclamation and mine
closure costs 8,364 8,414
Current portion of employee benefits 3,831 3,831
Accrued expenses and other 47,582 61,092
------ ------
Total current liabilities 245,196 172,961
LONG-TERM DEBT AND CAPITAL LEASE 228,437 308,422
RECLAMATION AND MINE CLOSURE COSTS 71,541 70,730
EMPLOYEE BENEFITS 84,129 81,868
DEFERRED INCOME TAXES 46,515 60,452
BELOW-MARKET COAL SUPPLY AGREEMENTS 25,934 26,823
OTHER NON-CURRENT LIABILITIES 43,921 4,176
------ -----
Total liabilities 745,673 725,432
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 2,042 2,038
Treasury stock (309) (216)
Additional paid-in capital 852,812 851,440
Accumulated other comprehensive loss (3,353) (3,459)
Retained deficit (101,920) (95,602)
-------- -------
Total International Coal Group, Inc.
stockholders' equity 749,272 754,201
Noncontrolling interest 64 64
Total stockholders' equity 749,336 754,265
------- -------
Total liabilities and stockholders'
equity $1,495,009 $1,479,697
========== ==========
INTERNATIONAL COAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(in thousands)
Three months
ended
------------
March 31,
---------
2011 2010
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,307) $(8,852)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation, depletion and
amortization 25,656 26,397
Loss on extinguishment of debt - 21,987
Amortization and write-off of
deferred finance costs and debt
discount 1,458 3,158
Amortization of accumulated employee
benefit obligations 172 (7)
Compensation expense on share based
awards 1,218 984
Gain on sale of assets, net (6,723) (3,481)
Provision for bad debt 329 (79)
Deferred income taxes (1,860) (7,583)
Changes in assets and liabilities:
Accounts receivable (18,813) (24,463)
Inventories (10,695) 3,914
Prepaid expenses and other (2,269) 856
Other non-current assets (4,530) 761
Accounts payable 912 5,425
Accrued expenses and other (13,510) (16,133)
Reclamation and mine closure costs 761 (339)
Other liabilities 42,067 2,890
------ -----
Net cash from operating activities 7,866 5,435
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets 245 1,000
Additions to property, plant,
equipment and mine development (31,106) (20,635)
Withdrawals of restricted cash 394 8,854
Distribution to joint venture (11) -
Net cash from investing activities (30,478) (10,781)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on short-term debt (1,199) (833)
Repayments on long-term debt and
capital lease (4,964) (4,928)
Proceeds from convertible notes
offering - 115,000
Proceeds from senior notes offering - 198,596
Proceeds from common stock offering - 102,453
Repurchases of senior notes - (181,612)
Purchases of treasury stock (93) (11)
Proceeds from stock options exercised 158 -
Debt issuance costs - (14,243)
--- -------
Net cash from financing activities (6,098) 214,422
------ -------
NET CHANGE IN CASH AND CASH
EQUIVALENTS (28,710) 209,076
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 215,276 92,641
------- ------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $186,566 $301,717
======== ========
INTERNATIONAL COAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (Unaudited)
(in thousands)
Three months ended
------------------
March 31,
---------
2011 2010
---- ----
Net loss attributable to
International Coal Group, Inc. $(6,318) $(8,852)
Depreciation, depletion and
amortization 25,656 26,397
Interest expense, net 8,110 13,300
Income benefit expense (2,357) (5,965)
Legal reserve for the Allegheny
lawsuit 40,000
Loss on extinguishment of debt - 21,987
Noncontrolling interest 11 -
--- ---
Adjusted EBITDA $65,102 $46,867
======= =======
RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (Unaudited)
(in thousands)
Three months ended
------------------
March 31,
---------
2011 2010
---- ----
Net loss attributable to International
Coal Group, Inc. $(6,318) $(8,852)
Legal reserve for the Allegheny lawsuit 40,000
Loss on extinguishment of debt - 21,987
Income tax benefit (11,714) (6,926)
------- ------
Adjusted net income attributable to
International Coal Group, Inc. $21,968 $6,209
======= ======
OPERATING STATISTICS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2011 (Unaudited)
(in thousands, except per ton amounts)
Central Northern Illinois
------- -------- --------
Appalachia Appalachia Basin
---------- ---------- -----
For the three months ended
March 31, 2011:
--------------------------
Tons sold 2,240 957 654
Coal sales revenues $179,359 $79,080 $25,272
Cost of coal sales $142,777 $55,672 $18,513
Coal sales revenue per ton
(b) $80.07 $82.66 $38.61
Cost of coal sales per ton
(b) $63.74 $58.19 $28.29
For the three months ended
March 31, 2010:
--------------------------
Tons sold 2,473 1,069 651
Coal sales revenues $178,964 $60,365 $23,536
Cost of coal sales $140,266 $53,671 $19,408
Coal sales revenue per ton
(b) $72.36 $56.45 $36.14
Cost of coal sales per ton
(b) $56.71 $50.19 $29.80
Purchased Total
--------- -----
Coal and
Ancillary
---------
For the three months ended
March 31, 2011:
--------------------------
Tons sold - 3,851
Coal sales revenues $ - $283,711
Cost of coal sales $1,002 $217,964
Coal sales revenue per ton
(b) $ n/m (c) $73.67
Cost of coal sales per ton
(b) $ n/m (c) $56.60
For the three months ended
March 31, 2010:
--------------------------
Tons sold 130 4,323
Coal sales revenues $7,625 $270,490
Cost of coal sales $6,720 $220,065
Coal sales revenue per ton
(b) $59.00 $62.57
Cost of coal sales per ton
(b) $52.00 $50.90
"Coal sales revenue per ton" and "Cost of coal sales per ton" are
calculated as Coal sales revenues or Cost of coal sales,
respectively, divided by Tons sold. Although Coal sales revenue per
ton and Cost of coal sales per ton are not measures of performance
calculated in accordance with GAAP, management believes that they
are useful to an investor in evaluating performance because they are
widely used in the coal industry as a measure to evaluate a
company's sales performance or control over its costs. Coal sales
revenue per ton and Cost of coal sales per ton should not be
considered in isolation or as substitutes for measures of
performance in accordance with GAAP. In addition, because Coal sales
revenue per ton and Cost of coal sales per ton are not calculated
identically by all companies, ICG's presentation may not be
(b) comparable to other similarly titled measures of other companies.
Coal sales within the Purchased Coal and Ancillary segment represent
coal sold under brokered coal contracts, all of which were legacy
contracts obtained in conjunction with business combinations. Per
ton information for the three months ended March 31, 2011 within the
Purchased Coal and Ancillary segment is not meaningful as all such
supply contracts have expired. Cost of coal sales shown for the
three months ended March 31, 2011 represents costs incurred at non-
(c) producing coal operations.
SOURCE International Coal Group, Inc.
