James River Coal Company Reports Third Quarter 2012 Operating Results

    James River Coal Company Reports Third Quarter 2012 Operating Results

-- Maintaining a Strong Balance Sheet with Available Liquidity of $172 Million

-- Through October 12, 2012, Repurchased $61.4 Million Principal Amount of
Debt for $23.9 Million (Average of $0.39 on the Dollar)

-- Conference Call Slides Posted to Company Website

PR Newswire

RICHMOND, Va., Nov. 7, 2012

RICHMOND, Va., Nov. 7, 2012 /PRNewswire/ --James River Coal Company (NASDAQ:
JRCC),today announced that it had net loss of $20.6 million or $0.59 per
diluted share for the third quarter of 2012 and net loss of $62.0 million or
$1.78 per diluted share for the nine months ended September 30,
2012.Included in the third quarter results is a gain of $22.2 million from
the repurchase of outstanding notes in open market purchases. The 2012
results are compared to net loss of $3.7 million or $.11 per diluted share for
the third quarter of 2011 and net loss of $10.5 million or $0.33 per diluted
share for the nine months ended September 30, 2011.

Peter T. Socha, Chairman and Chief Executive Officer commented: "We are very
pleased to have the uncertainty of the U.S. presidential election behind us.
We believe that this issue caused a temporary slowdown in economic growth both
in the United States and globally. The slowdown in growth, combined with warm
weather last winter, has contributed to an unusually weak market for thermal
and metallurgical coal. Hopefully, this condition will be corrected shortly.

"Despite the soft coal markets, we continue to be pleased with the performance
of our mine operations team. They made a series of adjustments to their
operating plans in response to the current markets. In the financial area, we
decided to take the opportunity to reduce our debt at very advantageous market
prices due to external events. We believe that we were able to successfully
balance our desire for a strong and liquid balance sheet with a window of
opportunity that was available to us."

FINANCIAL RESULTS

The following tables show selected operating results for the quarter and nine
months ended September 30, 2012 compared to the quarter and nine months ended
September 30, 2011 (in 000's except per ton amounts).

Total Results    Three Months Ended September      Nine Months Ended September
                 30,                              30,
                 2012              2011            2012            2011
                 Total     Per     Total    Per    Total    Per    Total    Per
                           Ton              Ton             Ton             Ton
Company and
contractor       2,229             2,816           7,571           7,578
production
(tons)
Coal purchased
from other       631               284             1,428           896
sources (tons)
Total coal
available to     2,860             3,100           8,999           8,474
ship (tons)
Coal shipments   3,164             3,163           9,125           8,497
(tons)
Coal sales       $        83.64   $       92.18  $      88.11  $       92.22
revenue          264,633           291,575         804,024         783,612
Freight and
handling         23,469    7.42    12,283   3.88   63,421   6.95   36,865   4.34
revenue
Cost of coal     244,365   77.23   245,240  77.53  705,568  77.32  642,167  75.58
sold
Freight and      23,469    7.42    12,283   3.88   63,421   6.95   36,865   4.34
handling costs
Depreciation,
depletion, &     35,518    11.23   31,234   9.87   98,152   10.76  75,479   8.88
amortization
Gross profit     (15,250)  (4.82)  15,101   4.77   304      0.03   65,966   7.76
(loss)
Selling,
general &        14,672    4.64    16,344   5.17   45,504   4.99   40,525   4.77
administrative
Acquisition      -                 -               -               8,504
costs
Adjusted EBITDA  $              $             $            $ 
plus acquisition 7,556     2.39    32,265   10.20  59,638   6.54   110,416  12.99
costs (1)
(1)        Adjusted EBITDA plus acquisition costs is defined under
           "Reconciliation of Non-GAAP Measures" in this release.
           Adjusted EBITDA is used to determine compliance with
           financial covenants in our revolving credit facility.




               Three Months Ended September 30,   Nine Months Ended September 30,
Segment
Results
               2012              2011              2012              2011
    CAPP       Total     Per     Total     Per     Total     Per     Total     Per
                         Ton               Ton               Ton               Ton
Company and
contractor     1,607             2,225             5,784             5,703
production
(tons)
Coal purchased
from other     631               284               1,428             896
sources (tons)
Total coal
available to   2,238             2,509             7,212             6,599
ship (tons)
Coal
shipments
(tons)
 Steam     1,540             1,983             4,716             5,257
(tons)

Metallurgical  1,007             582               2,632             1,343
(tons)
Total
Shipments      2,547             2,565             7,348             6,600
(tons)
Coal sales
revenue
 Steam     $        79.30   $        87.91   $        82.95   $        90.88
               122,116          174,325          391,211          477,742
           115,104   114.30  90,434    155.38  333,859   126.85  225,078   167.59
Metallurgical
Total coal     237,220   93.14   264,759   103.22  725,070   98.68   702,820   106.49
sales revenue
Freight and
handling       23,105    9.07    11,757    4.58    61,575    8.38    35,073    5.31
revenue
Cost of coal   $        87.15   $        86.35   $        86.86   $        86.51
sold           221,961          221,482          638,266          570,975
Freight and
handling       23,105    9.07    11,757    4.58    61,575    8.38    35,073    5.31
costs
               Three Months Ended September 30,   Nine Months Ended September 30,
               2012              2011              2012              2011
    Midwest    Total     Per     Total     Per     Total     Per     Total     Per
                         Ton               Ton               Ton               Ton
Company and
contractor     622               591               1,787             1,875
production
(tons)
Coal purchased
from other     -                 -                 -                 -
sources (tons)
Total coal
available to   622               591               1,787             1,875
ship (tons)
Coal
shipments      617               598               1,777             1,897
(tons)
Coal sales     $       44.43   $       44.84   $       44.43   $       42.59
revenue        27,413           26,816           78,954           80,792
Freight and
handling       364       0.59    526       0.88    1,846     1.04    1,792     0.94
revenue
Cost of coal   $       36.31   $       39.73   $       37.87   $       37.53
sold           22,404           23,758           67,302           71,192
Freight and
handling       364       0.59    526       0.88    1,846     1.04    1,792     0.94
costs

LIQUIDITY AND CASH FLOW

As of September 30, 2012, the Company had available liquidity of $171.7
million calculated as follows (in millions):

 Unrestricted Cash                           $ 151.4
 Availability under the Revolver               81.2
 Letters of Credit Issued under the Revolver   (60.9)
 Available Liquidity                         $ 171.7
 Restricted Cash                             $ 29.6

Capital expenditures for the third quarter were $20.6 million and $66.5
million for the nine months ended September 30, 2012.

During the third quarter of 2012, the Company repurchased $53.7 million of its
outstanding debt, consisting of $5.0 million principal amount of the 2019
Senior Notes, $19.9 million principal amount of the 2018 Convertible Senior
Notes and $28.8 million principal amount of the 2015 Convertible Senior
Notes. The debt repurchases were made at a cost of $20.9 million, plus
accrued interest of $0.8 million, in open market purchases. The repurchases
resulted in a gain of $22.2 million, which includes the write-off of $0.9
million of financing costs. Additionally, in October 2012, the Company
repurchased an additional $7.7 million its outstanding debt at a cost of $2.9
million, in open market purchases, consisting of $5.2 million principal amount
of the 2018 Convertible Senior Notes and $2.5 million principal amount of the
2015 Convertible Senior Notes.

SALES POSITION

As of November 6, 2012, we had the following agreements to ship coal at a
fixed and known price (in 000's except per ton amounts):

               2013 Priced
               As of August 8, 2012   As of November 6,   Change
                                      2012
                         Avg Price            Avg Price          Avg Price
               Tons      Per Ton      Tons    Per         Tons   Per
                                              Ton                Ton
 CAPP (1)      1,337     $         3,405   $      2,068  $     
                         79.32                 74.04            70.63
 Midwest (2)   2,140     $         2,342   $      202    $     
                         45.35                 45.25            44.19
               2014 Priced
               As of August 8, 2012   As of November 6,   Change
                                      2012
                         Avg Price            Avg Price          Avg Price
               Tons      Per Ton      Tons    Per         Tons   Per
                                              Ton                Ton
 CAPP (1)      300       $         300     $      -      $     
                         75.75                 75.75                -
 Midwest       700       $         900     $      200    $     
 (2)(3)                  49.00                 47.64            42.88
 (1) Priced tons in CAPP in 2013 do not include approximately 1,100,000
 tons of met coal that have been sold but not yet priced.
 (2) The prices for the Midwest are minimum base price amounts adjusted
 for projected fuel escalators.
 (3) 200,000 tons of 2012 coal moved to 2014.

CONFERENCE CALL, WEBCAST AND REPLAY: The Company will hold a conference call
with management to discuss the quarterly earnings November 7, 2012 at 11:00
a.m. Eastern Time. The conference call can be accessed by dialing
877-340-2553, or through the James River Coal Company website at
http://www.jamesrivercoal.com/. International callers, please dial
678-224-7860. A replay of the conference call will be available on the
Company's website.

James River Coal Company is one of the leading coal producers in Central
Appalachia and the Illinois Basin. The company sells metallurgical,
bituminous steam and industrial-grade coal to electric utility companies and
industrial customers both domestically and internationally. The Company's
operations are managed through eight operating subsidiaries located throughout
eastern Kentucky, southern West Virginia and southern Indiana. Additional
information about James River Coal can be found at its web site
www.jamesrivercoal.com

FORWARD-LOOKING STATEMENTS: Certain statements in this press release and
other written or oral statements made by or on behalf of us are
"forward-looking statements" within the meaning of the federal securities
laws. Statements regarding future events and developments and our future
performance, as well as management's expectations, beliefs, plans, estimates
or projections relating to the future, are forward-looking statements within
the meaning of these laws. Forward looking statements include, without
limitation, statements regarding future sales and contracting activity, and
projected fuel escalators. These forward-looking statements are subject to a
number of risks and uncertainties. These risks and uncertainties include, but
are not limited to, the following: our cash flows, results of operation or
financial condition; the consummation of acquisition, disposition or financing
transactions and the effect thereof on our business; our ability to
successfully integrate International Resource Partners LP and its related
entities (IRP); governmental policies, regulatory actions and court decisions
affecting the coal industry or our customers' coal usage; legal and
administrative proceedings, settlements, investigations and claims; our
ability to obtain and renew permits necessary for our existing and planned
operation in a timely manner; environmental concerns related to coal mining
and combustion and the cost and perceived benefits of alternative sources of
energy; inherent risks of coal mining beyond our control, including weather
and geologic conditions or catastrophic weather-related damage; our production
capabilities; availability of transportation; our ability to timely obtain
necessary supplies and equipment; market demand for coal, electricity and
steel; competition; our relationships with, and other conditions affecting,
our customers; employee workforce factors; our assumptions concerning
economically recoverable coal reserve estimates; future economic or capital
market conditions; our plans and objectives for future operations and
expansion or consolidation; and the other risks detailed in our reports filed
with the Securities and Exchange Commission (SEC). Management believes that
these forward-looking statements are reasonable; however, you should not place
undue reliance on such statements. These statements are based on current
expectations and speak only as of the date of such statements. We undertake no
obligation to publicly update or revise any forward-looking statement, whether
as a result of future events, new information or otherwise.



JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
                                                      September 30,  December
                                                      2012           31, 2011
                               Assets                 (unaudited)
Current assets:
      Cash and cash equivalents                     $ 151,435        199,711
      Trade receivables                               95,318         107,557
      Inventories:
               Coal                                   37,268         52,717
               Materials and supplies                 17,754         17,800
                            Total inventories         55,022         70,517
      Prepaid royalties                               8,371          8,465
      Other current assets                            12,315         11,461
                            Total current assets      322,461        397,711
Property, plant, and equipment, net                   877,203        909,294
Goodwill                                              26,492         26,492
Restricted cash and short term investments           29,624         29,510
Other assets                                          33,442         41,575
                            Total assets            $ 1,289,222      1,404,582
                            Liabilities and
                            Shareholders' Equity
Current liabilities:
      Accounts payable                              $ 75,755         110,557
      Accrued salaries, wages, and employee           15,304         12,996
      benefits
      Workers' compensation benefits                  9,200          9,200
      Black lung benefits                             2,512          2,512
      Accrued taxes                                   6,594          7,563
      Other current liabilities                       27,055         27,861
                            Total current             136,420        170,689
                            liabilities
Long-term debt, less current maturities              549,070        582,193
Other liabilities:
      Noncurrent portion of workers' compensation     64,110         60,721
      benefits
      Noncurrent portion of black lung benefits       58,590         56,152
      Pension obligations                             26,461         29,121
      Asset retirement obligations                    100,105        94,654
      Other                                           12,592         14,390
                            Total other liabilities   261,858        255,038
                            Total liabilities         947,348        1,007,920
Commitments and contingencies
Shareholders' equity:
      Preferred stock, $1.00 par value. Authorized   -              -
      10,000,000 shares
      Common stock, $.01 par value. Authorized
      100,000,000 shares; issued and outstanding
               35,887,611 and 35,671,953 shares as of
               September 30, 2012 and December 31,    359            357
               2011
      Paid-in-capital                                 544,881        541,362
      Accumulated deficit                             (159,656)      (97,682)
      Accumulated other comprehensive loss            (43,710)       (47,375)
                            Total shareholders'       341,874        396,662
                            equity
                               Total liabilities
                               and shareholders'    $ 1,289,222      1,404,582
                               equity



JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                                        Three Months Ended  Nine Months Ended
                                        September 30,       September 30,
                                        2012      2011      2012      2011
Revenues
      Coal sales revenue              $ 264,633   291,575   804,024   783,612
      Freight and handling revenue      23,469    12,283    63,421    36,865
              Total revenue             288,102   303,858   867,445   820,477
Cost of sales:
      Cost of coal sold                 244,365   245,240   705,568   642,167
      Freight and handling costs        23,469    12,283    63,421    36,865
      Depreciation, depletion, and      35,518    31,234    98,152    75,479
      amortization
              Total cost of sales       303,352   288,757   867,141   754,511
              Gross profit (loss)      (15,250)  15,101    304       65,966
Selling, general and administrative     14,672    16,344    45,504    40,525
expenses
Acquisition costs                       -         -         -         8,504
              Total operating income    (29,922)  (1,243)   (45,200)  16,937
              (loss)
Interest expense                        13,200    13,215    40,112    36,673
Interest income                         (217)     (173)     (602)     (356)
(Gain) loss on debt transactions       (22,231)  -         (22,231)  740
Miscellaneous income, net               (147)     (271)     (580)     (573)
              Total other (income)      (9,395)   12,771    16,699    36,484
              expense, net
              Net loss before income    (20,527)  (14,014)  (61,899)  (19,547)
              taxes
Income tax expense (benefit)            25        (10,282)  75        (9,000)
Net loss                              $ (20,552)  (3,732)   (61,974)  (10,547)
Earnings (loss) per common share
      Basic earnings (loss) per       $ (0.59)    (0.11)    (1.78)    (0.33)
      common share
      Diluted earnings (loss) per     $ (0.59)    (0.11)    (1.78)    (0.33)
      common share



JAMES RIVER COAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                          Nine Months Ended
                                                          September 30,
                                                          2012      2011
Cash flows from operating activities:
 Net loss                                               $ (61,974)  (10,547)
 Adjustments to reconcile net loss to net cash provided
 by operating activities
          Depreciation, depletion, and amortization      98,152    75,479
          Accretion of asset retirement obligations       3,948     3,215
          Amortization of debt discount and issue costs   12,914    10,479
          Stock-based compensation                        3,808     3,948
          Deferred income tax benefit                     -         (10,026)
          Gain on sale or disposal of property, plant     (121)     -
          and equipment
          (Gain) loss on debt transactions                (22,231)  740
          Changes in operating assets and liabilities:
                Receivables                               12,239    93,449
                Inventories                               16,084    (1,294)
                Prepaid royalties and other current       (760)     3,972
                assets
                Restricted cash                           (114)     (6,010)
                Other assets                              5,202     (2,808)
                Accounts payable                          (34,802)  (44,431)
                Accrued salaries, wages, and employee     2,308     3,851
                benefits
                Accrued taxes                             (1,256)   (525)
                Other current liabilities                 (1,014)   9,594
                Workers' compensation benefits            3,389     2,960
                Black lung benefits                       3,596     2,640
                Pension obligations                       (153)     (1,335)
                Asset retirement obligations              (495)     (3,807)
                Other liabilities                         (224)     (149)
                         Net cash provided by operating   38,496    129,395
                         activities
Cash flows from investing activities:
 Additions to property, plant, and equipment              (66,466)  (95,118)
 Payment for acquisition, net of cash acquired            -         (515,962)
 Proceeds from sale of property, plant and equipment      610       -
                         Net cash used in investing       (65,856)  (611,080)
                         activities
Cash flows from financing activities:
 Proceeds from issuance of long-term debt                 -         505,000
 Repayment of long-term debt                              (20,916)  (150,000)
 Net proceeds from issuance of common stock               -         170,545
 Debt issuance costs                                      -         (15,668)
                         Net cash (used in) provided by   (20,916)  509,877
                         financing activities
                         Increase (decrease) in cash      (48,276)  28,192
Cash and cash equivalents at beginning of period          199,711   180,376
Cash and cash equivalents at end of period              $ 151,435   208,568



JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Reconciliation of Non GAAP Measures
(in thousands)
(unaudited)

EBITDA is used by management to measure operating performance. We define
EBITDA as net income or loss plus interest expense (net), income tax expense
(benefit) and depreciation, depletion and amortization (EBITDA), to better
measure our operating performance. We regularly use EBITDA to evaluate our
performance as compared to other companies in our industry that have different
financing and capital structures and/or tax rates. In addition, we use EBITDA
in evaluating acquisition targets.

Adjusted EBITDA is defined as EBITDA as further adjusted for certain cash and
non-cash charges as specified in our revolving credit facility and is used in
several of the covenants in that facility. Adjusted EBITDA plus acquisition
costs further adjusts Adjusted EBITDA to add back certain non-recurring costs
incurred in connection with the IRP acquisition that may not reflect the trend
of future results. We believe that Adjusted EBITDA plus acquisition cost
presents a useful measure of our ability to service and incur debt on an
ongoing basis.

EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs are not
recognized terms under GAAP and are not an alternative to net income,
operating income or any other performance measures derived in accordance with
GAAP or an alternative to cash flow from operating activities as a measure of
operating liquidity. Because not all companies use identical calculations,
this presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition
costs may not be comparable to other similarly titled measures of other
companies. Additionally, EBITDA, Adjusted EBITDA, Adjusted EBITDA plus
acquisition costs are not intended to be a measure of free cash flow for
management's discretionary use, as they do not reflect certain cash
requirements such as tax payments, interest payments and other contractual
obligations.

                           Three Months Ended        Nine Months Ended
                           September    September    September    September
                           30           30           30           30
                           2012         2011         2012         2011
Net income (loss)        $ (20,552)     (3,732)      (61,974)     (10,547)
Income tax expense        25           (10,282)     75           (9,000)
Interest expense          13,200       13,215       40,112       36,673
Interest income            (217)        (173)        (602)        (356)
Depreciation, depletion,   35,518       31,234       98,152       75,479
and amortization
EBITDA (before           $ 27,974       30,262       75,763       92,249
adjustments)
Other adjustments
specified
 in our current debt
agreement
 Direct acquisition    -            -            -            8,504
costs
      (Gain) loss on       (22,231)     -            (22,231)     740
      debt transactions
 Other                1,813        2,003        6,106        6,174
Adjusted EBITDA          $ 7,556        32,265       59,638       107,667
Write-up of IRP            -            -            -            2,749
inventory
Adjusted EBITDA plus     $ 7,556        32,265       59,638       110,416
acquisition costs



CONTACT: James River Coal Company
         Elizabeth M. Cook
         Director of Investor Relations
         (804) 780-3000



SOURCE James River Coal Company

Website: http://www.jamesrivercoal.com
 
Press spacebar to pause and continue. Press esc to stop.