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Alpha Natural Resources Announces Results for Fourth Quarter and Full Year 2012



  Alpha Natural Resources Announces Results for Fourth Quarter and Full Year
                                     2012

- Fourth quarter and full year 2012 revenue and adjusted EBITDA of $1.6
billion and $7.0 billion, respectively, and $217 million and $792 million,
respectively

- Restructuring and cost control measures begin to reduce Alpha's cost of coal
sales per ton in Q4

- Total liquidity at year-end of approximately $2.1 billion, including
approximately $1.0 billion in cash and marketable securities

- Guidance provided for 2013

PR Newswire

BRISTOL, Va., Feb. 14, 2013

BRISTOL, Va., Feb. 14, 2013 /PRNewswire/ -- Alpha Natural Resources, Inc.
(NYSE: ANR), a leading U.S. coal producer, reported a fourth quarter 2012 net
loss of $128 million or $0.58 per diluted share compared with a net loss of
$793 million or $3.62 per diluted share in the fourth quarter of 2011. 
Excluding impairment and restructuring charges, and other adjustments
described in our "Reconciliation of Adjusted Net Income (Loss) to Net Loss,"
the fourth quarter 2012 adjusted net loss was $41 million or $0.19 per diluted
share compared with an adjusted net loss of $19 million or $0.09 per diluted
share in the fourth quarter of 2011.

The Company recorded $228 million of impairment and restructuring charges in
the fourth quarter of 2012, which are largely non-cash.  These charges include
$188 million arising from Alpha's annual goodwill impairment testing, which
reflects projected coal market conditions and lower expected future production
and shipments particularly for thermal coal, as well as a $40 million impact
of charges and asset impairments arising from our recent restructuring
initiatives.  The restructuring plan announced in September 2012 is now
substantially complete.  Alpha will continue to assess market conditions and
may further adjust its operational footprint and marketing strategy as
dictated by evolving industry conditions.

Earnings before interest, taxes, depreciation, depletion and amortization
(EBITDA) for the fourth quarter of 2012 was $193 million, compared with a loss
of $550 million in the year ago period.  Excluding impairment and
restructuring charges and other adjustments described in our "Reconciliation
of EBITDA and Adjusted EBITDA to Net Loss," the fourth quarter 2012 Adjusted
EBITDA was $217 million. 

Quarterly Financial & Operating Highlights

(millions, except per-share and per-ton amounts)

 
                                                Q4       Q3       Q4

                                                2012     2012     2011^(2)
 
                                                $1,355.2 $1,455.7 $1,793.6
Coal revenues
Net loss                                        ($127.6) ($46.1)  ($792.9)
Net loss per diluted share                      ($0.58)  ($0.21)  ($3.62)
Adjusted net loss^1                             ($41.4)  ($35.7)  ($18.9)
Adjusted net loss per diluted share^1           ($0.19)  ($0.16)  ($0.09)
EBITDA^1                                        $192.6   $143.9   ($550.0)
Adjusted EBITDA^1                               $217.2   $178.5   $261.4
Tons of coal sold                               25.9     27.9     31.1
Weighted average coal margin per ton            $17.45   $7.73    $8.46
Adjusted weighted average coal margin per ton^1 $10.14   $7.68    $9.92

1.       These are non-GAAP financial measures.  A reconciliation of adjusted
net loss to net loss, a reconciliation of both EBITDA and adjusted EBITDA to
net loss, and a reconciliation of adjusted cost of coal sales per ton to cost
of coal sales per ton are included in tables accompanying the financial
schedules.
2.       Adjusted to reflect certain immaterial corrections and the impact of
retrospective adjustments made as a result of applying acquisition accounting
for Massey.

"This was a pivotal quarter for Alpha and concluded a year in which we made
tremendous strides across our strategic priorities.  Alpha posted strong
results in the fourth quarter, reporting adjusted EBITDA of $217 million
primarily driven by our ability to control costs in both our Eastern and our
Western operations," said Kevin Crutchfield, Alpha's chief executive officer. 
"We have also been executing well against our internal objectives, and the
extensive restructuring initiative we announced in September is largely behind
us.  And while we do not expect the unit costs reported in the fourth quarter
to be sustainable, we do expect to at least hold the line or slightly reduce
our unit costs in the East this year compared with full year 2012, and we are
guiding to a substantial reduction in SG&A expense for full year 2013."

"Once again Alpha improved its safety performance on several fronts," Kevin
continued.  "Compared with the prior quarter, both our incident rate and our
days-lost declined by 20 percent in the fourth quarter.  Looking at the full
year 2012, Alpha achieved a 20 percent improvement in its incident rate and a
32 percent reduction in serious and substantial MSHA citations.  No matter
what market headwinds or other challenges we face, we can never lose our focus
on 'Running Right.'  The year 2012 was no exception.  I would like to
congratulate our entire workforce on their successful efforts.  While I am
pleased with the efforts all of our employees are making on accident
reduction, the loss of three of our fellow employees in 2012 is a somber
reminder that there remains much work to be done, and we must remain vigilant
at all times."

Market conditions in 2012 were challenging for all coal producers, with
reduced demand and over-supply in both the global metallurgical market and
U.S. thermal market.  In this environment, Alpha moved swiftly and decisively
to reposition the Company for success.  Specifically, Alpha:

  o Reduced its operating footprint, idling uneconomic and high-cost
    production;
  o Curtailed capital expenditures;
  o Streamlined its operations, with the expectation of reducing overhead
    expenses by an estimated $150 million annually going forward; and,
  o Enhanced its liquidity and increased its cash position.

While the restructuring efforts announced in 2012 are largely complete, Alpha
will continue to evaluate market conditions and remains poised to adjust as
necessary as the industry continues to evolve.  Now that market conditions for
metallurgical coal are beginning to point toward gradual improvement, Alpha
expects to be well-positioned to emerge from the recent market headwinds as an
industry leader and take advantage of opportunities in the market as they
arise.

Financial Performance

  o Total revenues in the fourth quarter of 2012 were $1.6 billion compared
    with $2.1 billion in the fourth quarter of 2011, and coal revenues were
    $1.4 billion, down from $1.8 billion in the year-ago period.  The
    decreases in total revenues and coal revenues were primarily attributable
    to lower coal shipment volumes and lower average realizations for
    metallurgical and Eastern steam coal.  Freight and handling revenues and
    other revenues were $165 million and $38 million, respectively, during the
    fourth quarter of 2012 versus $181 million and $95 million, respectively,
    in fourth quarter of 2011.

    During the fourth quarter of 2012, metallurgical coal shipments were 4.9
    million tons, compared with 5.3 million tons in the fourth quarter of 2011
    and flat compared with the third quarter of 2012.  Alpha shipped 11.6
    million tons of Powder River Basin (PRB) coal during the quarter, compared
    with 13.9 million tons in the year-ago period and 13.2 million tons in the
    third quarter of 2012.  Eastern steam coal shipments were 9.4 million
    tons, compared with 11.9 million tons in the year-ago period and 9.8
    million tons in the prior quarter.  Average per-ton realizations on
    metallurgical coal shipments in the fourth quarter were $121.27, down from
    $156.48 in the fourth quarter last year and $129.96 in the third quarter
    of 2012.  Average per-ton realization for PRB shipments rose to $13.00,
    compared with $11.96 in the fourth quarter last year and $12.87 in the
    prior quarter.  The per-ton average realization for Eastern steam coal
    shipments was $64.55, compared with $66.93 in the year-ago period and
    $66.40 in the third quarter of 2012.

  o Total costs and expenses during the fourth quarter of 2012 were $1.6
    billion, compared with $2.9 billion in the fourth quarter of 2011.  Cost
    of coal sales was $0.9 billion, compared with $1.6 billion in the year-ago
    period.  The cost of coal sales in the East averaged $55.51 per ton, a
    level notably lower than in previous quarters due primarily to the impact
    of a $154 million ($10.73 per ton) reduction in estimated asset retirement
    obligations arising largely from changes in engineering estimates of
    future water treatment costs, including the impacts of evolving treatment
    technologies and maturing treatment plans, and a benefits-related accrual
    reversal.  This compares with Eastern cost of coal sales per ton of $81.21
    in the fourth quarter last year and $75.84 in the previous quarter. 
    Excluding the above mentioned estimate change, the impact of
    benefits-related accrual reversal, merger-related expenses, UBB-related
    expenses, and mineral lease terminations, the adjusted cost of coal sales
    in the East averaged $68.55 per ton, compared with $78.57 in the fourth
    quarter last year and $75.93 in the previous quarter.  The decrease in
    adjusted Eastern cost of coal sales per ton during the fourth quarter
    primarily reflects the impact of Alpha's restructuring and cost control
    measures, the related shift in mix with the relatively lower-cost
    Pennsylvania longwall mines contributing a larger percentage of overall
    Eastern production, and certain normal course of business expense benefits
    not treated as adjustments.  The cost of coal sales per ton for Alpha Coal
    West's PRB mines was $9.21 during the fourth quarter of 2012, and the
    adjusted cost of coal sales per ton, which excludes the impact of a
    benefits-related accrual reversal, was $9.43, compared with cost of coal
    sales per ton of $9.44 in the fourth quarter of 2011 and $9.40 in the
    third quarter of 2012. 

  o Selling, general and administrative expense in the fourth quarter of 2012
    was $49 million, compared with selling, general and administrative expense
    of $50 million in the fourth quarter of 2011 which included $8 million of
    pre-tax merger-related expenses.  Depreciation, depletion and amortization
    (DD&A) decreased to $240 million during the fourth quarter of 2012 from
    $286 million in the year-ago period primarily due to lower production
    volumes.  The benefit from amortization of acquired intangibles, net, fell
    to $6 million, compared with a benefit of $51 million last year, primarily
    due to the completion of shipments under most of the coal supply
    agreements acquired from Massey.   

  o Alpha recorded a net loss of $128 million, or $0.58 per diluted share,
    during the fourth quarter of 2012, compared with a net loss of $793
    million, or $3.62 per diluted share, during the fourth quarter of 2011.
     The year-over-year decrease in Alpha's net loss is primarily attributable
    to goodwill impairment charges of $802 million in the fourth quarter of
    2011.  During the fourth quarter of 2012, impairment and restructuring
    charges totaled $228 million.  Fourth quarter 2012 net loss included the
    following items. 

Fourth quarter 2012 net loss adjustments                       ($ in millions)
 
                                                               $188.2
Goodwill impairment
Asset impairment and restructuring                             40.3
UBB expenses                                                   5.8
Change in fair value and settlement of derivative instruments  7.1
Merger-related benefit                                         (12.7)
Gain on early extinguishment of debt                           (0.8)
Change in estimated future costs of asset retirement           (154.4)
obligations
Impact of benefits-related accrual reversal                    (45.9)
Impacts on accrual for legal matters                           (3.1)
Amortization of acquired intangibles, net                      (5.9)
Income tax effect of above items                               67.9
Discrete tax charge from valuation allowance adjustment        20.1
Discrete tax charge from state statutory tax rate and          (20.4)
apportionment change, net of federal tax impact
After-tax total of above items                                 $86.2

Note: Adjustments pertaining to the comparable year-ago period are detailed in
the Reconciliation of Adjusted Net Income (Loss) to Net Loss.

Excluding these items, the adjusted net loss was $41 million, or $0.19 per
diluted share, compared with an adjusted net loss of $19 million, or $0.09 per
diluted share, in the fourth quarter of 2011.

  o EBITDA was $193 million in the fourth quarter of 2012, compared with a
    loss of $550 million in the prior-year period.  Excluding impairment and
    restructuring charges, and various other items detailed in the
    "Reconciliation of EBITDA and Adjusted EBITDA to Net Loss," adjusted
    EBITDA was $217 million in the fourth quarter of 2012, compared with $261
    million in the fourth quarter of 2011. 

Full Year 2012 Results

  o For the full year 2012, Alpha reported total revenues of $7.0 billion,
    including $6.0 billion in coal revenues, which included a full year
    contribution from the former operations of Massey that were acquired on
    June 1, 2011.  This compares with total revenues of $7.1 billion and coal
    revenues of $6.2 billion in 2011, which included the Massey operations for
    the last seven months of the year.  The slight decrease in coal revenue in
    2012, despite the inclusion of a full 12 months of legacy Massey
    operations, is primarily attributable to ramping down the quarterly
    run-rate for metallurgical shipments in 2012 together with a 19 percent
    decrease in average per-ton realizations on metallurgical coal which
    resulted in a 14 percent decrease in metallurgical coal revenues.  This
    decrease was partially offset by an 11 percent increase in Eastern steam
    coal revenues largely due to a 12 percent increase in shipment volumes in
    2012 primarily resulting from a full year of the acquired Massey
    operations.

    During 2012, Alpha's coal shipments totaled 108.8 million tons, compared
    with 106.3 million tons for the full year 2011.  Metallurgical coal
    shipments in 2012 were 20.3 million tons, compared with 19.2 million tons
    shipped during 2011.  Shipments of PRB coal and Eastern steam coal in 2012
    were 46.7 million tons and 41.8 million tons, respectively, compared with
    49.9 million tons and 37.2 million tons, respectively, in the previous
    year.   

  o For the full year 2012, the company-wide average per-ton realization was
    $55.29 and the adjusted average cost of coal sales was $46.45 per ton,
    resulting in an adjusted weighted average coal margin of $8.84 per ton, or
    16 percent.  This compares with the company-wide average per-ton
    realization of $58.22 and the adjusted cost of coal sales per ton of
    $44.56 in 2011, which resulted in an adjusted weighted average coal margin
    of $13.66 per ton, or 23 percent.

  o For 2012, Alpha recorded a net loss of $2.4 billion, or $11.06 per diluted
    share.  Excluding various items detailed in the attached "Reconciliation
    of Adjusted Net Income (Loss) to Net Loss", the adjusted net loss in 2012
    was $207 million, or $0.94 per diluted share.  EBITDA for 2012 was a loss
    of $1.8 billion and adjusted EBITDA, which excludes goodwill impairment
    and restructuring charges and various other items detailed in the
    "Reconciliation of EBITDA and Adjusted EBITDA to Net Loss," was $792
    million.  EBITDA for 2011 was $28 million and adjusted EBITDA was $1.2
    billion. 

Liquidity and Capital Resources

Cash provided by operating activities for the quarter ended December 31, 2012
was $213 million, compared with $149 million for the fourth quarter of 2011. 
For the full year 2012, cash provided by operating activities was $518
million, compared with $687 million in 2011. 

Capital expenditures, exclusive of Lease by Application payments, for the
fourth quarter and full year 2012 were $70 million and $402 million,
respectively, compared with $214 million and $529 million in the fourth
quarter and full year 2011, respectively. 

At the end of the fourth quarter of 2012, Alpha had available liquidity of
approximately $2.05 billion, consisting of cash, cash equivalents and
marketable securities of $1.03 billion, plus $1.02 billion available under the
company's secured credit facility and accounts receivable securitization
facility.  Total long-term debt, including the current portion of long-term
debt at December 31, 2012, was $3.4 billion, compared with $3.0 billion at
December 31, 2011. 

Market Overview

After a period of cyclical weakness in the global metallurgical coal market in
the second half of 2012 during which approximately 30 million tons of
uneconomic production was removed from the seaborne market, developments are
beginning to point to gradual improvement.  Chinese coking coal imports rose
30 percent from November to December 2012, reaching a record 7.6 million
metric tonnes in the last month of the year, and full year 2012 coking coal
imports were a record 53.6 million metric tonnes, a 20 percent increase over
2011.  China's purchasing managers' index (PMI) has been rising for several
months and now stands at a 9-month high.  Recently, tropical storms have
hampered activity at Australian ports and disrupted rail shipments, although
the impact is not as severe as the extreme weather events witnessed in early
2011. 

In the Atlantic basin, European demand has been muted by economic headwinds,
Brazil slowed its importation of coking coal somewhat in 2012, and U.S. demand
has been generally stable.  As a result, for the last several quarters, the
Atlantic market has been characterized by market weakness and over-supply,
particularly for lower quality metallurgical coals.  Currently the Atlantic
basin remains disconnected from Asia where the impact of production cuts and
strengthening demand have begun to spark gradual improvement in the met
market.  Spot transactions of Australian met coal in Asia have reportedly
risen above the recent benchmark price, and are some 20 percent higher than
the low point in the spot market in September of 2012.  As the leading U.S.
producer of metallurgical coal, Alpha expects to be well-positioned to benefit
from an eventual recovery in the global metallurgical coal market,
particularly in the Atlantic.

Throughout 2012, the market for domestic steam coal remained challenging due
in part to the fourth warmest winter ever recorded, low natural gas prices and
the long-term secular trend of coal-fired plant retirements all of which
contributed to reduced coal usage and led to record-high inventory levels that
peaked at an estimated 213 million tons in the spring of the year.  As natural
gas prices have increased from their lows below $2 per MCF to a level in the
low $3s and with forward pricing hovering around the $4 mark, coal has
recovered some of its market share which bottomed at 32 percent of U.S.
electricity generation and reached approximately 38 percent by year-end.  As a
result of the increased usage of coal in the second half of the year, along
with production cuts estimated at around 100 million tons during 2012, utility
inventories have started to retreat but remain elevated at approximately 197
million tons as of the end of the year. 

In light of the continuing weakness in the U.S. steam coal market, Alpha
adjusted its shipment levels and implemented a restructuring plan to
right-size its operating footprint.  With respect to the PRB, Alpha has
reduced its planned shipments in the near-term until elevated inventories
eventually correct, allowing acceptable profit levels.  In the East, Alpha's
Pittsburgh seam longwalls, with high heat content and relatively lower costs,
are expected to produce an estimated 9 million to 10 million tons in 2013.  In
Central Appalachia, Alpha has idled or closed a number of higher production
cost steam coal operations in order to control costs and match supply with
structurally diminished demand that has decreased markedly over the course of
the last year.  At the same time, Alpha more than doubled its Eastern thermal
coal exports in 2012 to nearly six million tons, and the Company plans to
continue to build its export thermal franchise in 2013, and beyond.

2013 Outlook

Alpha expects to ship between 81 and 92 million tons during 2013, including 19
to 22 million tons of Eastern metallurgical coal, 25 to 30 million tons of
Eastern steam coal, and 37 to 40 million tons of Western steam coal out of the
PRB.  As of January 25, 2013, 47 percent of the midpoint of anticipated
metallurgical coal shipments were committed and priced at an average per ton
realization of $113.25; 94 percent of the midpoint of anticipated Eastern
steam coal shipments were committed and priced at an average per ton
realization of $62.71; and 97 percent of the midpoint of anticipated PRB
shipments were committed and priced at an average per ton realization of
$12.84.  The Company's 2013 cost of coal sales is expected to range between
$71 and $75 per ton in the East and between $10.00 and $11.00 per ton in the
West.  Selling, general and administrative expenses are anticipated to range
from $140 million to $160 million for 2013.  Interest expense and DD&A expense
are anticipated to be in the ranges of $230 million to $240 million and $875
million to $975 million, respectively.  And capital expenditures for 2013 are
expected to fall within the range of $300 million to $350 million.

Guidance

(in millions, except per-ton and percentage amounts)
                                                               2013
Average per Ton Sales Realization on Committed and Priced Coal
Shipments^1,2
    West                                                       $12.84
    Eastern Steam                                              $62.71
    Eastern Metallurgical                                      $113.25
Coal Shipments (tons)^3                                        81 – 92
    West                                                       37 – 40
    Eastern Steam                                              25 – 30
    Eastern Metallurgical                                      19 – 22
Committed and Priced (%)^4                                     85%
    West                                                       97%
    Eastern Steam                                              94%
    Eastern Metallurgical                                      47%
Committed and Unpriced (%)^4,5                                 9%
    West                                                       0%
    Eastern Steam                                              2%
    Eastern Metallurgical                                      33%
West – Cost of Coal Sales per Ton                              $10.00 – $11.00
East – Cost of Coal Sales per Ton^6                            $71.00 – $75.00
Selling, General & Administrative Expense^7
                                                               $140 – $160
(excluding merger-related expenses)
Depletion, Depreciation & Amortization                         $875 – $975
Interest Expense                                               $230 – $240
Capital Expenditures^8                                         $300 – $350

Notes:                                                                                                                                                                                                                

 1. Based on committed and priced coal shipments as of January 25, 2013.
 2. Actual average per ton realizations on committed and priced tons
    recognized in future periods may vary based on actual freight expense in
    future periods relative to assumed freight expense embedded in projected
    average per ton realizations.
 3. Eastern shipments in 2013 include an estimated 0.5 to 1.0 million tons of
    brokered coal.
 4. As of January 25, 2013, compared with the midpoint of shipment guidance
    range.
 5. In 2013, committed and unpriced Eastern tons include approximately 6.7
    million tons of metallurgical coal subject to market pricing,
    approximately 0.3 million tons of steam coal tons subject to market
    pricing, approximately 0.2 million tons of steam coal subject to collared
    pricing with an average pricing range of approximately $83 to $103 per
    ton, and approximately 0.2 million tons of steam coal subject to average
    indexed pricing estimated at approximately $74 per ton.
 6. Excludes merger-related expenses and UBB charges.  Alpha has not
    reconciled the adjusted Eastern cost of coal sales per ton to Eastern cost
    of coal sales per ton because merger-related expenses and UBB charges,
    necessary reconciling items, cannot be reasonably predicted, and Alpha is
    unable to provide guidance for such expenses.
 7. Alpha has not reconciled the adjusted selling, general & administrative
    expense to selling, general & administrative expense because
    merger-related expenses, a necessary reconciling item, cannot be
    reasonably predicted, and Alpha is unable to provide guidance for such
    expenses.
 8. Includes the annual bonus bid payment on the Federal Lease by Application
    for the Belle Ayr mine of $42 million.

About Alpha Natural Resources
With $7.0 billion in total revenue in 2012, Alpha Natural Resources ranks as
America's third-largest coal producer by revenue and third-largest by
production.  Alpha is the nation's largest supplier of metallurgical coal used
in the steel-making process and is a major supplier of thermal coal to
electric utilities and manufacturing industries.  In 2012, the Company had
more than 200 customers on five continents.  More information about Alpha can
be found on the company's Web site at www.alphanr.com.  

Forward Looking Statements
This news release includes forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on Alpha's expectations and beliefs concerning future
events and involve risks and uncertainties that may cause actual results to
differ materially from current expectations. These factors are difficult to
predict accurately and may be beyond Alpha's control. The following factors
are among those that may cause actual results to differ materially from our
forward-looking statements:

  o worldwide market demand for coal, electricity and steel;
  o decline in coal prices;
  o our liquidity, results of operations and financial condition; 
  o regulatory and court decisions;
  o changes in environmental laws and regulations, including those directly
    affecting our coal mining and production, and those affecting our
    customers' coal usage, including potential carbon or greenhouse gas
    related legislation;
  o reductions or increases in customer coal inventories and the timing of
    those changes;
  o global economic, capital market or political conditions, including a
    prolonged economic recession in the markets in which we operate;
  o changes in safety and health laws and regulations and the ability to
    comply with such changes;
  o inherent risks of coal mining beyond our control;
  o 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;
  o the geological characteristics of the Powder River Basin, Central and
    Northern Appalachian coal reserves;
  o competition in coal markets;
  o our assumptions concerning economically recoverable coal reserve
    estimates;
  o changes in postretirement benefit obligations, pension obligations and
    federal and state black lung obligations;
  o increased costs and obligations potentially arising from the Patient
    Protection and Affordable Care Act;
  o our ability to negotiate new UMWA wage agreements on terms acceptable to
    us, increased unionization of our workforce in the future, and any strikes
    by our workforce;
  o availability of skilled employees and other employee workforce factors,
    such as labor relations;
  o potential instability and volatility in worldwide financial markets;
  o future legislation and changes in regulations, governmental policies or
    taxes or changes in interpretation thereof;
  o disruption in coal supplies;
  o our production capabilities and costs;
  o our ability to integrate successfully operations that we have acquired or
    developed with our existing operations, as well as those 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;
  o our plans and objectives for future operations and expansion or
    consolidation;
  o the consummation of financing transactions, acquisitions or dispositions
    and the related effects on our business;
  o the outcome of pending or potential litigation or governmental
    investigations, including with respect to the Upper Big Branch explosion;
  o the inability of our third-party coal suppliers to make timely deliveries
    and the refusal by our customers to receive coal under agreed contract
    terms;
  o our relationships with, and other conditions affecting, our customers,
    including the inability to collect payments from our customers if their
    creditworthiness declines;
  o changes in and renewal or acquisition of new long-term coal supply
    arrangements;
  o railroad, barge, truck and other transportation availability, performance
    and costs;
  o availability of mining and processing equipment and parts;
  o disruptions in delivery or changes in pricing from third party vendors of
    goods and services that are necessary for our operations, such as diesel
    fuel, steel products, explosives and tires;
  o fair value of derivative instruments not accounted for as hedges that are
    being marked to market;
  o our ability to obtain or renew surety bonds on acceptable terms or
    maintain self bonding status;
  o indemnification of certain obligations not being met;
  o continued funding of the road construction business, related costs, and
    profitability estimates;
  o restrictive covenants in our secured credit facility and the indentures
    governing our outstanding debt securities;
  o certain terms of our outstanding debt securities, including any
    conversions of our convertible senior debt securities, that may adversely
    impact our liquidity;
  o our substantial indebtedness and potential future indebtedness;
  o significant or rapid increases in commodity prices;
  o reclamation and mine closure obligations;
  o inflationary pressures on supplies and labor;
  o utilities switching to alternative energy sources such as natural gas,
    renewables and coal from basins where we do not operate;
  o weather conditions or catastrophic weather-related damage; and
  o 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 our Annual Report on Form 10-K for the year
    ended December 31, 2011, and Quarterly Reports on Form 10-Q for the
    quarters ended March 31, 2012, June 30, 2012, and September 30, 2012.

These and other risks and uncertainties are discussed in greater detail in
Alpha's Annual Reports on Form 10-K and other documents filed with the
Securities and Exchange Commission.  Forward-looking statements in this news
release or elsewhere speak only as of the date made.  New uncertainties and
risks come up from time to time, and it is impossible for Alpha to predict
these events or how they may affect the Company.  Alpha has no duty to, and
does not intend to, update or revise the forward-looking statements in this
news release after the date it is issued.  In light of these risks and
uncertainties, investors should keep in mind that the results, events or
developments disclosed in any forward-looking statement made in this news
release may not occur. 

FINANCIAL TABLES FOLLOW

Use of Non-GAAP Measures
In addition to the results prepared in accordance with generally accepted
accounting principles in the United States (GAAP) provided throughout this
press release, Alpha has presented the following non-GAAP financial measures,
which management uses to gauge operating performance: EBITDA, adjusted EBITDA,
adjusted net loss, adjusted diluted loss per common share, adjusted cost of
coal sales per ton, adjusted coal margin per ton and adjusted weighted average
coal margin per ton.   These non-GAAP financial measures exclude various items
detailed in the attached "Reconciliation of EBITDA and Adjusted EBITDA to Net
Loss" and "Reconciliation of Adjusted Net Loss to Net Loss."

The definition of these non-GAAP measures may be changed periodically by
management to adjust for significant items important to an understanding of
operating trends.  These measures are not intended to replace financial
performance measures determined in accordance with GAAP. Rather, they are
presented as supplemental measures of the Company's performance that
management believes are useful to securities analysts, investors and others in
assessing the Company's performance over time.  Moreover, these measures are
not calculated identically by all companies and therefore may not be
comparable to similarly titled measures used by other companies.  A
reconciliation of each of these measures to its most directly comparable GAAP
measure is provided in the tables below.

Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands Except Shares and Per Share Data)
(Unaudited)
                      Three Months Ended December    Twelve Months Ended
                      31,                            December 31,
                      2012            2011(1)        2012          2011(1)
Revenues:
   Coal revenues    $ 1,355,155    $  1,793,631    $ 6,015,696   $ 6,189,434
   Freight and        164,771         181,478        761,928       662,238
handling revenues
   Other revenues     38,427          95,043         197,260       256,009
      Total           1,558,353       2,070,152      6,974,884     7,107,681
revenues
Costs and expenses:
   Cost of coal
sales (exclusive of   923,552         1,555,035      5,004,516     5,080,921
items shown
separately below)
   Freight and        164,771         181,478        761,928       662,238
handling costs
   Other expenses     2,238           31,664         45,432        142,709
   Depreciation,
depletion and         240,059         285,767        1,037,575     770,769
amortization
   Amortization of
acquired              (5,858)         (50,859)       (70,338)      (114,422)
intangibles, net
   Selling, general
and administrative
expenses (exclusive
of depreciation,
      depletion and
amortization shown    49,162          49,652         209,788       382,250
separately above)
   Asset impairment   40,296          -              1,068,906     -
and restructuring
   Goodwill           188,194         802,337        1,713,526     802,337
impairment
      Total costs     1,602,414       2,855,074      9,771,333     7,726,802
and expenses
Loss from             (44,061)        (784,922)      (2,796,449)   (619,121)
operations
Other income
(expense):
   Interest expense   (58,834)        (47,188)       (198,147)     (141,914)
   Interest income    (376)           991            3,373         3,978
   Gain (loss) on
early                 773             (258)          773           (10,026)
extinguishment of
debt
   Miscellaneous      1,689           301            3,306         635
income, net
      Total other     (56,748)        (46,154)       (190,695)     (147,327)
expense, net
Loss before income    (100,809)       (831,076)      (2,987,144)   (766,448)
taxes 
Income tax            (26,769)        38,150         549,996       35,906
(expense) benefit 
Net loss            $ (127,578)    $  (792,926)    $ (2,437,148) $ (730,542)
Loss per common
share:
   Basic loss per   $ (0.58)       $  (3.62)       $ (11.06)     $ (4.06)
common share:
   Diluted loss per $ (0.58)       $  (3.62)       $ (11.06)     $ (4.06)
common share:
Weighted average
shares outstanding:
   Weighted average   220,542,577     219,280,297    220,261,555   180,126,226
shares--basic
   Weighted average   220,542,577     219,280,297    220,261,555   180,126,226
shares--diluted
(1) The results for the three and twelve months
ended December 31, 2011 have been restated to
reflect the impact of certain  
adjustments made to the provisional opening
balance sheet of Massey and certain immaterial
corrections recorded
in the first six
months of 2012.
This information is intended to be reviewed in conjunction with
the company's filings with the U.S. Securities and Exchange
Commission.

Alpha Natural Resources, Inc. and Subsidiaries
Supplemental Sales, Operations and Financial Data
(In Thousands, Except Per Ton and Percentage Data)
(Unaudited)
                         Three Months Ended                    Twelve Months Ended
                                                               December 31,
                         December    September    December
                         31,         30,          31,          2012        2011

                         2012        2012         2011
Tons sold (1):
   Powder River Basin    11,580      13,219       13,895       46,732      49,949
   Eastern steam         9,429       9,849        11,937       41,797      37,192
   Eastern               4,914       4,860        5,294        20,267      19,177
metallurgical
       Total             25,923      27,928       31,126       108,796     106,318
Average realized price
per ton sold (2)(9):
   Powder River Basin  $ 13.00     $ 12.87      $ 11.96      $ 12.94     $ 11.95
   Eastern steam       $ 64.55     $ 66.40      $ 66.93      $ 65.92     $ 66.92
   Eastern             $ 121.27    $ 129.96     $ 156.48     $ 131.02    $ 161.85
metallurgical
      Weighted average $ 52.28     $ 52.12      $ 57.63      $ 55.29     $ 58.22
total
Coal revenues:
   Powder River Basin  $ 150,546   $ 170,160    $ 166,238    $ 604,880   $ 596,724
   Eastern steam         608,686     653,948      798,927      2,755,474   2,488,729
   Eastern               595,923     631,594      828,465      2,655,342   3,103,981
metallurgical
      Total coal       $ 1,355,155 $ 1,455,702  $ 1,793,630  $ 6,015,696 $ 6,189,434
revenues
Adjusted cost of coal
sales per ton
(3)(7)(8)(11)(12)(13):
   Powder River Basin  $ 9.43      $ 9.40       $ 9.44       $ 10.15     $ 9.99
   East (4)            $ 68.55     $ 75.93      $ 78.57      $ 73.77     $ 75.19
      Adjusted         $ 42.14     $ 44.44      $ 47.71      $ 46.45     $ 44.56
weighted average total
Adjusted weighted
average coal margin    $ 10.14     $ 7.68       $ 9.92       $ 8.84      $ 13.66
per ton (9)
Adjusted weighted
average coal margin      19.4%       14.7%        17.2%        16.0%       23.5%
percentage (10)
Cost of coal sales per
ton (3)(7)(11)(12):
   Powder River Basin  $ 9.21      $ 9.40       $ 9.44       $ 10.10     $ 9.99
   East (4)            $ 55.51     $ 75.84      $ 81.21      $ 71.76     $ 80.06
      Weighted average $ 34.83     $ 44.39      $ 49.17      $ 45.28     $ 47.14
total
Weighted average coal  $ 17.45     $ 7.73       $ 8.46       $ 10.01     $ 11.08
margin per ton (5)
Weighted average coal    33.4%       14.8%        14.7%        18.1%       19.0%
margin percentage (6)
Net cash provided by   $ 212,772   $ 170,298    $ 149,409    $ 518,419   $ 686,641
operating activities 
Capital expenditures   $ 69,785    $ 87,348     $ 213,657    $ 402,377   $ 528,586

(1) Stated in thousands of short tons.
(2) Coal revenues divided by tons sold.  This statistic is stated as free on
board (FOB) at the processing plant.
(3) Cost of coal sales divided by tons sold.  The cost of coal sales per ton
only includes costs in our Eastern and Western Coal Operations. 
(4) East includes the Company's operations in Central Appalachia (CAPP) and
Northern Appalachia (NAPP).
(5) Weighted average total sales realization per ton less weighted average
total cost of coal sales per ton.
(6) Weighted average coal margin per ton divided by weighted average total
sales realization per ton.
(7) Amounts per ton calculated based on unrounded revenues, cost of coal sales
and tons sold.
(8) For the three and twelve months ended December 31, 2012 and December 31,
2011 and the three months ended September 30, 2012, adjusted cost of coal
sales per ton for East 
includes adjustments to exclude the impact of certain non-cash charges set
forth in the table below.
(9) Weighted average total sales realization per ton less adjusted weighted
average total cost of coal sales per ton.
(10) Adjusted weighted average coal margin per ton divided by weighted average
total sales realization per ton.
(11) Adjusted cost of coal sales per ton, adjusted weighted average coal
margin per ton and adjusted weighted average coal margin percentage
for our Eastern Operations are reconciled to their unadjusted amounts as
follows:

 

                       Three months ended                  Twelve months ended
                       December   September    December    December   December
                       31,        30,          31,         31,        31,

                       2012       2012         2011        2012       2011
Adjusted cost of
coal sales per       $ 68.55    $ 75.93      $ 78.57     $ 73.77    $ 75.19
ton-East
Impact of
merger-related         0.04       0.01         0.76        0.56       3.34
expenses
Impact of UBB          0.41       (0.10)       1.42        0.51       0.73
expenses
Impact of mineral      -          -            0.46        -          0.14
lease terminations
Impact of changes in
future costs of        (10.73)    -            -           (2.48)     0.66
asset retirement
obligations
Impact of
benefits-related       (2.76)     -            -           (0.64)     -
accrual reversal
Impact of write-off
of weather-related     -          -            -           0.04       -
property damage
Cost of coal sales   $ 55.51    $ 75.84      $ 81.21     $ 71.76    $ 80.06
per ton-East

 

(12) The results for the three and twelve months ended December 31, 2011 have
been restated to reflect the impact of certain  
adjustments made to the provisional opening balance sheet of Massey and
certain immaterial corrections recorded
in the first six months of 2012.
(13) For the three and twelve months ended December 31, 2012, adjusted cost of
coal sales per ton for the Powder River Basin was $9.43 and $10.15,
respectively, 
which excludes the impact of $0.22 and $0.05 for a benefits-related accrual
reversal from cost of coal sales per ton of $9.21 and $10.10.
This information is intended to be reviewed in conjunction with the company's
filings with the U.S. Securities and Exchange Commission.

Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets and Supplemental Liquidity Data
(In Thousands)
(Unaudited)
                                            December 31,        December 31,
                                            2012                2011 (1)
Cash and cash equivalents              $    730,723         $   585,882
Trade accounts receivable, net              418,166             641,975
Inventories, net                            398,060             492,022
Short-term marketable securities            297,452             80,342
Prepaid expenses and other current          488,821             747,854
assets
Total current assets                        2,333,222           2,548,075
Property, equipment and mine                2,219,016           2,812,069
development costs, net
Owned and leased mineral rights and         7,428,192           8,284,328
land, net
Goodwill, net                               567,664             2,281,191
Long-term marketable securities             755                 20,489
Other non-current assets                    540,957             647,893
Total assets                           $    13,089,806      $   16,594,045
Current portion of long-term debt      $    95,015          $   46,029
Trade accounts payable                      255,191             504,059
Accrued expenses and other current          872,402             1,359,160
liabilities
Total current liabilities                   1,222,608           1,909,248
Long-term debt                              3,291,037           2,922,052
Pension and postretirement medical          1,195,187           1,214,724
benefit obligations
Asset retirement obligations                763,482             743,613
Deferred income taxes                       971,001             1,507,923
Other non-current liabilities               678,676             921,441
Total liabilities                           8,121,991           9,219,001
Total stockholders' equity                  4,967,815           7,375,044
Total liabilities and stockholders'    $    13,089,806      $   16,594,045
equity
                                            As of
                                            December 31,        December 31,
                                            2012                2011
Liquidity ($ in 000's):
Cash and cash equivalents              $    730,723         $   585,882
Marketable securities with maturities       297,452             80,342
of less than one year
Marketable securities with maturities       755                 20,489
of greater than one year
Total cash, cash equivalents and            1,028,930           686,713
marketable securities
Unused revolving credit and A/R             1,023,300           1,114,700
securitization facilities (2)
Total liquidity                        $    2,052,230       $   1,801,413
(1) During the six months ended June 30, 2012, the Company recorded certain
adjustments to the provisional opening balance sheet of Massey. Accordingly,
the December 31, 2011 balance sheet was adjusted to reflect these changes as
if they were recorded on the acquisition date in accordance with generally
accepted accounting principles related to acquisition accounting. The Company
also recorded the effects of certain immaterial corrections which are also
reflected in the December 31, 2011 balance sheet.
(2) The revolving credit facility is subject to a minimum liquidity
requirement of $500 million.
This information is intended to be reviewed in conjunction with the company's
filings with the U.S. Securities and Exchange Commission.

 

Alpha Natural Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
                                       Twelve Months Ended December 31,
                                       2012                    2011(1)
Operating activities:
   Net loss                       $    (2,437,148)       $     (730,542)
   Adjustments to reconcile net
loss to net cash provided by
      operating activities:
      Depreciation, depletion,         1,037,575               770,769
and amortization
      Amortization of acquired         (70,338)                (114,422)
intangibles, net
      Amortization of debt issue
costs and accretion of debt            43,745                  30,263
discount
      Mark-to-market adjustments       (2,795)                 (125,391)
for derivatives 
      Accretion of asset               65,548                  43,062
retirement obligations
      Stock-based compensation         9,881                   53,685
      Employee benefit plans, net      72,465                  68,157
      (Gain) loss on early             (773)                   10,026
extinguishment of debt
      Changes in future costs of       (154,377)               37,137
asset retirement obligations
      Deferred income taxes            (554,575)               (17,084)
      Asset impairment and             1,068,906               -
restructuring
      Goodwill impairment              1,713,526               802,337
      Other, net                       (39,984)                (22,694)
   Changes in operating assets
and liabilities:
      Trade accounts receivable,       229,882                 (178,704)
net
      Inventories, net                 93,962                  120,460
      Prepaid expenses and other       230,259                 28,199
current assets
      Other non-current assets         (7,549)                 (30,191)
      Trade accounts payable           (246,228)               84,784
      Accrued expenses and other       (407,128)               (41,763)
current liabilities
      Pension and postretirement       (53,008)                (105,584)
medical benefit obligations
      Asset retirement                 (50,313)                (22,833)
obligations
      Other non-current                (23,114)                26,970
liabilities
Net cash provided by operating         518,419                 686,641
activities
Investing activities:
   Cash paid for acquisition, net      -                       (711,387)
of cash acquired
   Capital expenditures                (402,377)               (528,586)
   Acquisition of mineral rights       (95,765)                (64,900)
under federal leases
   Purchases of marketable             (555,096)               (374,048)
securities
   Sales of marketable securities      352,112                 547,249
   Purchase of equity-method           (10,100)                (14,800)
investments
   Proceeds from disposition of        38,250                  8,470
property and equipment
   Other, net                          -                       (9,005)
Net cash used in investing             (672,976)               (1,147,007)
activities
Financing activities:
   Proceeds from borrowings on         494,795                 2,100,000
long-term debt
   Principal repayments of             (160,157)               (1,315,357)
long-term debt
   Principal repayments of
capital lease obligations and          (10,548)                -
other long-term debt
   Debt issuance costs                 (16,361)                (85,226)
   Common stock repurchases            (7,507)                 (212,257)
   Proceeds from exercise of           176                     4,316
stock options
   Other                               (1,000)                 -
Net cash provided by financing         299,398                 491,476
activities
Net increase in cash and cash     $    144,841           $     31,110
equivalents
Cash and cash equivalents at      $    585,882           $     554,772
beginning of period
Cash and cash equivalents at end  $    730,723           $     585,882
of period
(1) The results for the twelve months ended December 31, 2011 have been
restated to reflect the impact of certain  
adjustments made to the provisional opening balance sheet of Massey and
certain immaterial corrections recorded
in the first six months of 2012.

 
This information is intended to be reviewed in conjunction with the company's
filings with the U. S. Securities and Exchange Commission.

Alpha Natural Resources, Inc. and Subsidiaries
Reconciliation of EBITDA and Adjusted EBITDA to Net Loss
(In Thousands)
(Unaudited)
                   Three Months Ended                    Twelve Months Ended
                                                         December 31,
                   December    September    December
                   31,         30,          31,          2012          2011

                   2012        2012         2011
Net loss         $ (127,578) $ (46,146)   $ (792,926)  $ (2,437,148) $ (730,542)
Interest expense   58,834      47,345       47,188       198,147       141,914
Interest income    376         (1,328)      (991)        (3,373)       (3,978)
Income tax
expense            26,769      (83,182)     (38,150)     (549,996)     (35,906)
(benefit) 
Depreciation,
depletion and      240,059     238,894      285,767      1,037,575     770,769
amortization
Amortization of
acquired           (5,858)     (11,682)     (50,859)     (70,338)      (114,422)
intangibles, net
   EBITDA          192,602     143,901      (549,971)    (1,825,133)   27,835
Goodwill           188,194     -            802,337      1,713,526     802,337
impairment
Asset impairment
and                40,296      13,676       -            1,068,906     -
restructuring
UBB expenses       5,810       (1,539)      24,503       31,508        40,920
Change in fair
value and
settlement of      7,110       28,581       (53,617)     (8,275)       (107,573)
derivative
instruments
Merger related
expense            (12,747)    (6,101)      29,912       13,741        402,099
(benefit)
(Gain) loss on
early              (773)       -            258          (773)         10,026
extinguishment
of debt
Changes in
future costs of    (154,377)   -            -            (154,377)     37,137
asset retirement
obligations
Mineral lease      -           -            7,955        -             7,955
terminations
Impact of
benefits-related   (45,865)    -            -            (45,865)      -
accrual reversal
Impacts on
accrual for        (3,067)     -            -            (3,067)       -
legal matters
Impact of
write-off of       -           -            -            2,300         -
weather-related
property damage
   Adjusted      $ 217,183   $ 178,518    $ 261,377    $ 792,491     $ 1,220,736
EBITDA 
This information is intended to be reviewed in
conjunction with the company's filings with the U.S.
Securities and Exchange Commission.

 

Alpha Natural Resources, Inc. and Subsidiaries
Reconciliation of Adjusted Net Income (Loss) to Net Loss
(In Thousands Except Shares and Per Share Data)
(Unaudited)
                   Three Months Ended                          Twelve Months Ended
                                                               December 31,
                   December      September      December
                   31,           30,            31,            2012          2011

                   2012          2012           2011
Net loss         $ (127,578)   $ (46,146)     $ (792,926)    $ (2,437,148) $ (730,542)
Goodwill           188,194       -              802,337        1,713,526     802,337
impairment
Asset impairment
and                40,296        13,676         -              1,068,906     -
restructuring
UBB expenses       5,810         (1,539)        24,503         31,508        40,920
Change in fair
value and
settlement of      7,110         28,581         (53,617)       (8,275)       (107,573)
derivative
instruments
Merger related
expense            (12,747)      (6,101)        29,912         13,741        402,099
(benefit)
(Gain) loss on
early              (773)         -              258            (773)         10,026
extinguishment
of debt
Changes in
future costs of    (154,377)     -              -              (154,377)     37,137
asset retirement
obligations
Mineral lease      -             -              7,955          -             7,955
terminations
Impact of
benefits-related   (45,865)      -              -              (45,865)      -
accrual reversal
Impacts on
accrual for        (3,067)       -              -              (3,067)       -
legal matters
Impact of
write-off of       -             -              -              2,300         -
weather-related
property damage
Amortization of
acquired           (5,858)       (11,682)       (50,859)       (70,338)      (114,422)
intangibles, net
Estimated income
tax effect of      67,850        (10,401)       12,345         (330,668)     (66,274)
above
adjustments
Discrete tax
charge from
valuation          20,051        (2,048)        -              40,757        -
allowance
adjustment
Discrete tax
charge from
state statutory
tax rate and       (20,437)      -              -              (26,834)      -
apportionment
change, net of
federal tax
impact
Discrete tax
charge from
non-deductible     -             -              2,268          -             8,230
transaction
costs
Reversal of
certain tax        -             -              (1,057)        -             (1,057)
reserves
   Adjusted net  $ (41,391)    $ (35,660)     $ (18,881)     $ (206,607)   $ 288,836
income (loss) 
   Weighted
average            220,542,577   220,417,448    219,280,297    220,261,555   182,012,022
shares--diluted
   Adjusted
diluted earnings $ (0.19)      $ (0.16)       $ (0.09)       $ (0.94)      $ 1.59
(loss) per
common share 
This information is intended to be reviewed in conjunction with the
company's filings with the U.S. Securities and Exchange Commission.

 

SOURCE Alpha Natural Resources

Contact: Investor Contact, Todd Allen, CFA, Vice President, Investor
Relations, +1-276-739-5328, tallen@alphanr.com; Media Contact, Ted Pile, Vice
President, Corporate Communications, +1-276-623-2920, tpile@alphanr.com
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