Pennsylvania Court Orders Arch Coal Unit to Pay a Fraction of the Future Damages in Contract Breach
Feb 20 15
A Pennsylvania court, on remand, ruled that an Arch Coal Inc. unit must only pay a fraction of the future damages initially awarded to Allegheny Energy Supply Co. and Monongahela Power Co. in a long-running coal delivery contract dispute. The Court of Common Pleas of Allegheny County, Pa., awarded Allegheny Energy and Monongahela Power about $7.5 million in future damages plus costs and prejudgment interest at 6% per annum from August. The court originally awarded Allegheny Energy and Monongahela Power more than $90.3 million in future damages. In August 2012, the Superior Court of Pennsylvania remanded the matter to the trial court with instructions to recalculate future damages using the market price of coal when Allegheny Energy learned of the contract breach in August 2006. The Superior Court did affirm the trial court's calculation of past damages through 2010, which were in excess of $13 million. The initial suitaccused Arch unit Wolf Run Mining Co., then owned by International Coal Group, of failing to live up to a contract to supply coal from the Sycamore No. 2 deep mine to the Harrison power plant. The contract dispute started when Wolf Run declared force majeure upon temporarily idling Sycamore No. 2 in the third quarter of 2006. Wolf Run eventually reopened the mine in 2007, but it did not provide notice that it would have to operate at reduced volumes in order to safely navigate geologic challenges. Allegheny Energy said the production stoppages and failure to meet the full tonnage requirements under the contract resulted in a breach of the supply agreement. In its verdict, filed Feb. 12, the Court of Common Pleas said determining future damages by evaluating long-term contracts and adjusting them in anticipation of reopeners or adjustments for increased costs relied on speculation. Instead, the court used an analysis comparing eight actual contracts executed in 2006 for future delivery of coal to the Harrison power plant.
Arch Coal Inc. Announces Unaudited Consolidated Earnings Results for the Fourth Quarter and Year Ended December 31, 2014; Provides Earnings Guidance for the Year 2015
Feb 3 15
Arch Coal Inc. announced unaudited consolidated earnings results for the fourth quarter and year ended December 31, 2014. For the quarter, the company's revenues were $745,192,000 compared with $719,386,000 a year ago. Loss from operations was $5,303,000 compared with $340,678,000 a year ago. Loss from continuing operations before income taxes was $101,671,000 compared with $477,558,000 a year ago. Loss from continuing operations was $240,135,000 or $1.13 per basic and diluted share compared with $372,794,000 or $1.76 per basic and diluted share a year ago. Net loss was $240,135,000 or $1.13 per basic and diluted share compared with $371,214,000 or $1.75 per basic and diluted share a year ago. Adjusted EBITDA was $115,705,000 compared with $38,359,000 a year ago. Adjusted EBITDA from continuing operations was $115,705,000 compared with $33,716,000 a year ago. Adjusted net loss attributable to the company was $230,982,000 or $1.09 per diluted share compared with $95,082,000 or $0.45 per diluted share a year ago.
For the year, the company's revenues were $2,937,119,000 compared with $3,014,357,000 a year ago. Loss from operations was $149,531,000 compared with $663,141,000 a year ago. Loss from continuing operations before income taxes was $532,719,000 compared with $1,080,726,000 a year ago. Loss from continuing operations was $558,353,000 or $2.63 per basic and diluted share compared with $745,228,000 or $3.52 per basic and diluted share a year ago. Net loss was $558,353,000 or $2.63 per basic and diluted share compared with $641,832,000 or $3.03 per basic and diluted share a year ago. Adjusted EBITDA was $280,143,000 compared with $425,922,000 a year ago. Adjusted EBITDA from continuing operations was $280,143,000 compared with $252,146,000 a year ago. Adjusted net loss attributable to the company was $551,360,000 or $2.60 per diluted share compared with $229,193,000 or $1.08 per diluted share a year ago. Cash used in operating activities was $33,582,000 compared with cash provided by operating activities of $55,742,000 a year ago. Capital expenditures were $147,286,000 compared with $296,984,000 a year ago.
The company expects to sell between 124 million and 136 million tons of thermal coal and between 6.3 million and 7.0 million tons of metallurgical coal during 2015. At estimated volume levels, the company is more than 90% committed on thermal sales for the full year. CapEx to be between $145 million and $160 million.