2008-07-29 05:00:00
Patriot Coal Announces Results for the Quarter Ended June 30, 2008
Highlights:
- Margins per ton improve 82%, driving EBITDA to more than $41 million
- Coal markets remain robust, with average selling prices up 14%
- Magnum Coal acquisition completed
- Announced 2-for-1 stock split
- Announced joint venture agreement to develop metallurgical reserves
- Updated 2008 & initial 2009 guidance, including Magnum
ST. LOUIS, July 29 /EMWNews/ -- Patriot Coal Corporation
(NYSE: PCX) today reported its financial results for the quarter ended June
30, 2008. The Company reported revenues of $339.7 million, EBITDA of $41.1
million, net income of $11.8 million and earnings per share of $0.22 for
the 2008 second quarter, after adjustment for the recently announced
2-for-1 stock split. This compares to historical results of $256.2 million
for revenues, $18.8 million for EBITDA and $5.8 million of net loss in the
2007 second quarter, and EBITDA of $17.1 million and a net loss of $3.1
million for the 2008 first quarter.
After giving effect to pro forma adjustments, 2007 second quarter
EBITDA was $44.8 million and net income was $9.4 million. Both of these
2007 amounts were largely driven by $45.8 million in gains on property
sales. Gains on property sales in the 2008 second quarter totaled $6.3
million. Excluding the effect of gains on property sales year-over-year,
EBITDA was $35.7 million higher in the second quarter of 2008 primarily due
to significantly improved operating margins.
"As we set out as a new public company, our stated strategies were to
tightly manage our operations, to maximize customer satisfaction, and to
pursue value-enhancing growth opportunities, all utilizing a
well-qualified, experienced team. I am pleased to report that Patriot's
actions and performance have been fully aligned with these strategies since
the spin-off. Our operating results have improved significantly, we have
captured value with new contracts and joint ventures, and we have almost
doubled our size with the Magnum acquisition. Further, with the addition of
Paul Vining and other key personnel from Magnum, we have added more
strength to our team," said Patriot Chief Executive Officer Richard M.
Whiting. "With the successful Magnum acquisition, we enter a new chapter in
our history as a significantly larger company with an enhanced footprint
and more opportunities to participate in the future demand for coal in the
U.S. and overseas."
"Strong coal markets drove our average selling prices up 14% year-over-
year, with Appalachian pricing rising 19% compared to the 2007 pro forma
amount. Patriot's operating margin per ton increased 82% this quarter
compared to the year-ago pro forma amount. This improvement is an example
of the increased value Patriot creates as a separate company with our
dedicated management and operating team," said Patriot Senior Vice
President and Chief Financial Officer Mark N. Schroeder. "As a result of
continued tight coal markets, management focus and the addition of Magnum,
we expect Patriot to deliver strong results into 2009 and beyond."
Financial & Operating Highlights
2008 Second Quarter
Tons sold in the 2008 second quarter totaled 5.9 million, up 0.5
million from the prior year. Most of this increase was associated with the
Illinois Basin, where volume increased 0.4 million tons. Metallurgical coal
represented 22% of tons sold in both the 2008 and the 2007 second quarters.
Volume increased 0.8 million tons in the second quarter of 2008 compared to
the 2008 first quarter.
Revenues in the 2008 second quarter were $339.7 million, an increase of
$83.5 million over the prior year historical amount and $76.0 million over
the pro forma amount. Revenues in Appalachia increased $48.7 million over
the prior year pro forma amount, primarily as a result of significantly
higher average selling prices. Revenues in the Illinois Basin increased
$16.8 million, as a result of the higher volume coupled with higher average
selling prices. Appalachia Other revenues increased by $10.5 million over
the prior period amount to $11.2 million in the 2008 second quarter,
primarily as a result of structured settlements on a property transaction
and past due royalties.
EBITDA was $41.1 million for the 2008 second quarter. After giving
effect to the pro forma adjustments and excluding the $45.8 million of 2007
gains on property sales, EBITDA in the 2007 second quarter was negative
$1.0 million. Gains on property sales in the 2008 second quarter totaled
$6.3 million.
"Our operations turned in a solid performance this quarter, with
improved margins across all segments. In Appalachia, in particular, our
operating margin almost doubled to more than $14 per ton compared to a year
ago. And we achieved these strong results while expanding some of our mines
and experiencing increased costs related to steel, fuel, lube and other
materials and supplies, both at company and contractor-operated mines,"
continued Schroeder.
Six Months Ended June 30, 2008
Tons sold for the six months ended June 30, 2008 were 10.9 million,
compared to 11.1 million in the prior year. Revenues in the first half of
2008 were $624.0 million, an increase of $98.1 million over the prior year
historical amount and $84.5 million over the pro forma amount. Higher
revenues were primarily a result of significantly higher average selling
prices, particularly in Appalachia.
EBITDA was $58.2 million for the first six months of 2008, compared to
$85.5 million in the year-ago period, after taking into account pro forma
adjustments. In the 2007 first half, Patriot realized gains on property
sales of $81.0 million. Gains on property sales in 2008 totaled $6.5
million. Excluding the effect of gains on property sales in both years,
EBITDA was $47.2 million higher in 2008, primarily due to significantly
improved operating margins.
Safety Awards
During the 2008 second quarter, three of Patriot's operations were
recognized for their 2007 safety performance by the Green River Council of
the Joseph A. Holmes Safety Association. The Patriot Surface Mine, Grand
Eagle Preparation Plant and Dodge Hill Mine each received awards based on
their low reportable incidence rates. The Patriot Surface Mine and the
Grand Eagle Preparation Plant each had no reportable incidents in 2007.
Finances
Patriot had revolver borrowings of $20.0 million as of June 30, 2008.
During the quarter, investments in joint ventures totaled $14.7 million and
fees associated with the Magnum transaction totaled $5.4 million. Capital
expenditures totaled $21.4 million in the 2008 second quarter and $33.4
million for the first half of 2008.
During the 2008 second quarter, the Company entered into a private
placement of $200 million in aggregate principal amount of 3.25%
Convertible Senior Notes due 2013. Restricted cash as of June 30
represented the net proceeds from the Convertible Senior Notes, which were
considered restricted until and unless the acquisition of Magnum Coal
Company was consummated. Patriot subsequently applied the majority of the
net proceeds to reduce the principal balance of debt assumed in connection
with its acquisition of Magnum.
Acquisition of Magnum Coal Company
On April 2, 2008, the Company announced that it had signed an agreement
to acquire Magnum, and on July 23, 2008, the transaction was completed.
Magnum sold 18.3 million tons of coal in 2007 and 9.1 million tons in the
first half of 2008, and operates 11 mines and 7 preparation plants in
Central Appalachia.
"I am proud of how quickly our teams were able to close this
transaction, knowing the regulatory, financing and integration steps
necessary. Our success gives me added confidence in Patriot's ability to
identify and finalize future strategic acquisitions," added Whiting. "With
the addition of Magnum, we have a much larger operating base in Central
Appalachia, opportunities for valuable operating and commercial synergies,
and a more diversified product portfolio with substantially higher
metallurgical coal capabilities. As the seventh largest coal producer in
the U.S. and the third largest in the eastern U.S., we now have additional
resources and capabilities to capture value in very robust coal markets."
Joint Venture Agreement to Develop Metallurgical Coal Reserves
On May 19, the Company announced it had entered into a joint venture
agreement to develop certain metallurgical coal reserves in Central
Appalachia. Patriot holds a 49% interest, based on its initial contribution
of coal reserves and $10.1 million cash. The venture is expected to build
production to over 500,000 annual tons by the end of 2008. Production at
this operation is expected to begin during the third quarter.
Market Overview
International coal demand continues to strengthen, while supply
struggles to meet the growing demand. China continues to be a major driver
in worldwide coal markets, with expected consumption increasing 15% this
year, and the import/export balance nearing break-even after years as a net
exporter. Blackouts are predicted in India due to coal shortages, and South
Africa's rebuild of coal stockpiles this spring has reduced its exports.
Meanwhile, on the supply side, operating issues at several large mines in
Russia have negatively impacted production as new safety measures are
implemented. Rail and port capacity in Australia continue to limit exports.
In metallurgical coal markets, world production of blast furnace iron is up
almost 6% compared to last year, also driven by strong demand in China.
In the U.S., coal consumption for electricity is up approximately 10
million tons compared to the first six months of 2007. Permitting,
equipment and labor constraints, and safety regulations are reducing coal
production, particularly in Central Appalachia, where production is down
0.9 million tons year-to-date compared to last year. The combination of
greater domestic consumption, higher exports and reduced production has
caused Appalachian and Illinois Basin coal inventory levels to decline 14
million tons from year-ago levels.
As a result of strong demand and limited supply, international and
domestic prices have risen 50% since April 1. The Company is participating
in the rising market, with Patriot and Magnum booking over 9 million tons
on a combined basis of new thermal business in the second quarter for 2009
through 2012 deliveries. Appalachian thermal coal was booked at
triple-digit prices per ton during the quarter. On Illinois Basin business
booked during the quarter, term prices on our higher-quality product were
in excess of $70 per ton, with annual price escalations.
Coal is a key global energy source, providing electricity to an
energy-hungry world. Patriot believes growing demand and constrained supply
are long-term fundamentals of the coal market.
Outlook
"We are very bullish on the coal markets as we look toward 2009. We are
working closely with our customers to ensure we are in a position to meet
their future volume and quality requirements. As a result of anticipated
higher average selling prices, we expect to generate substantial cash from
our operations in 2009," commented Whiting. "With the closing of the
transaction last week, Magnum's results will be consolidated with Patriot
beginning July 23. Our updated guidance takes into account that over 25% of
our 2009 deliveries remain unpriced and it is early in the 2009 budgeting
process. Additionally, our estimates of operational and commercial
synergies will be further refined as we continue to integrate Magnum."
For 2008, including Magnum beginning July 23, the Company anticipates
sales volumes in the range of 30.0 to 32.0 million tons and EBITDA between
$165 and $185 million. Earnings per share for 2008 will substantially
increase over prior guidance. This increase is a direct result of the
positive impact from purchase accounting adjustments related to the
valuation of existing sales contracts. Accretion related to below-market
sales contracts resulting from the acquisition of Magnum will be included
in the Company's net income, but will not be reflected in EBITDA.
For 2009, including Magnum for the full year, the Company anticipates
sales volumes in the range of 41.0 to 44.0 million tons and EBITDA between
$750 and $950 million.
As of June 30, 2008, including Magnum, less than 0.5 million tons of
expected 2008 volumes remained unpriced. Of the Company's expected 2009
volumes, 6.0 to 7.0 million tons and 5.0 to 6.0 million tons of met and
thermal volumes, respectively, remained unpriced as of June 30. Of expected
2010 volumes, 9.5 to 10.5 million tons and 17.0 to 18.0 million tons of met
and thermal volumes, respectively, remained unpriced as of June 30.
Conference Call
Management will hold a conference call to discuss the second quarter
results on July 29, 2008 at 9:00 a.m. Central Daylight Time. The conference
call can be accessed by dialing 800-288-9626, or through the Patriot Coal
website at http://www.patriotcoal.com. International callers can dial
612-332-0107 to access the conference call. A replay of the conference call
will be available on the Company's website and also by telephone, at
800-475-6701 for domestic callers or 320-365-3844 for international
callers, passcode 954935.
About Patriot Coal
Patriot Coal Corporation is the third largest producer and marketer of
coal in the eastern United States, with 21 Company-operated mines and
numerous contractor-operated mines in Appalachia and the Illinois Basin.
The Company ships to domestic and international electric utilities,
industrial users and metallurgical coal customers, and controls
approximately 1.9 billion tons of proven and probable coal reserves. The
Company's common stock trades on the New York Stock Exchange under the
symbol PCX.
Forward Looking Statements
Certain statements in this press release are forward-looking as defined
in the Private Securities Litigation Reform Act of 1995. These statements
involve certain risks and uncertainties that may be beyond our control and
may cause our actual future results to differ materially from expectations.
We do not undertake to update our forward-looking statements. Factors that
could affect our results include, but are not limited to: changes in laws
or regulations; changes in general economic conditions, including coal and
power market conditions; the outcome of commercial negotiations involving
sales contracts or other transactions; the Company's dependence on coal
supply agreements with Peabody Energy Corporation in the near future;
geologic, equipment and operational risks associated with mining; supplier
and contract miner performance and the availability and cost of key
equipment and commodities; the Company's ability to replace coal reserves;
labor availability and relations; availability and costs of transportation;
weather patterns affecting energy demand; ability to obtain mining permits;
legislative and regulatory developments; risks associated with
environmental laws and compliance; the outcome of pending or future
litigation; and the availability and costs of competing energy resources.
The Company undertakes no obligation (and expressly disclaims any such
obligation) to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. For
additional information concerning factors that could cause actual results
to materially differ from those projected herein, please refer to the
Company's Form 10-K, 10-Q, S-4 and 8-K reports.
Condensed Consolidated Income Statements (Unaudited)
For the Quarter Ended June 30, 2008 and 2007
(Dollars and tons in thousands, except per share data)
Pro Forma
Historical Quarter
Quarter Ended Ended
June June June
2008 2007 2007
Tons sold 5,861 5,345 5,345
Revenues
Sales $328,469 $255,466 $262,897
Other revenues 11,211 755 755
Total revenues 339,680 256,221 263,652
Costs and expenses
Operating costs and expenses 295,447 272,324 257,167
Depreciation, depletion and
amortization 20,905 19,560 18,993
Asset retirement obligation expense 3,259 3,640 3,640
Selling and administrative expenses 9,488 10,889 7,475
Net gain on disposal or exchange of
assets (6,336) (45,800) (45,800)
Operating profit (loss) 16,917 (4,392) 22,177
Interest income (3,621) (2,120) (2,120)
Interest expense 5,216 1,963 3,213
Income tax provision 3,507 - 10,107
Minority interests - 1,579 1,579
Net income (loss) $11,815 $(5,814) $9,398
Earnings per share, basic & diluted $0.22
EBITDA $41,081 $18,808 $44,810
Pro forma results include transactions associated with the company's
spin-off from Peabody Energy, which was effective October 31, 2007. For
the quarter ended June 30, 2007, pro forma results include a $7.4 million
increase to revenues from repricing of a major coal supply agreement; a
$15.6 million reduction of operating costs associated with the assumption
by Peabody Energy of certain retiree healthcare liabilities; and a
$3.4 million reduction of selling and administrative costs for Patriot's
stand-alone management and administrative structure and functions. Pro
forma financial information was derived from the company's historical
combined financial statements and includes these adjustments, among
others, to present results as if the spin-off of Patriot Coal from
Peabody Energy occurred on January 1, 2007.
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
Basic and diluted earnings per share reflect a 2-for-1 stock split
payable August 11, 2008. Earnings per share for 2007 is not presented for
periods prior to the spin-off as Peabody and its affiliates were
the sole owners prior to October 31, 2007.
Condensed Consolidated Income Statements (Unaudited)
For the Six Months Ended June 30, 2008 and 2007
(Dollars and tons in thousands, except per share data)
Pro Forma
Historical Six Months
Six Months Ended Ended
June June June
2008 2007 2007
Tons sold 10,946 11,094 11,094
Revenues
Sales $607,570 $524,507 $538,099
Other revenues 16,444 1,377 1,377
Total revenues 624,014 525,884 539,476
Costs and expenses
Operating costs and expenses 554,565 549,989 519,548
Depreciation, depletion and
amortization 39,515 40,918 40,041
Asset retirement obligation expense 6,675 9,295 9,295
Selling and administrative expenses 17,777 21,798 15,450
Net gain on disposal or exchange of
assets (6,530) (81,026) (81,026)
Operating profit (loss) 12,012 (15,090) 36,168
Interest income (6,870) (4,766) (4,766)
Interest expense 7,538 4,788 5,355
Income tax provision 2,595 - 17,055
Minority interests - 2,653 2,653
Net income (loss) $8,749 $(17,765) $15,871
Earnings per share, basic & diluted $0.16
EBITDA $58,202 $35,123 $85,504
Pro forma results include transactions associated with the company's
spin-off from Peabody Energy, which was effective October 31, 2007. For
the six months ended June 30, 2007, pro forma results include a
$13.6 million increase to revenues from repricing of a major coal supply
agreement; a $31.1 million reduction of operating costs associated with
the assumption by Peabody Energy of certain retiree healthcare
liabilities; and a $6.3 million reduction of selling and administrative
costs for Patriot's stand-alone management and administrative structure
and functions. Pro forma financial information was derived from the
company's historical combined financial statements and includes these
adjustments, among others, to present results as if the spin-off of
Patriot Coal from Peabody Energy occurred on January 1, 2007.
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
Basic and diluted earnings per share reflect a 2-for-1 stock split
payable August 11, 2008. Earnings per share for 2007 is not presented for
periods prior to the spin-off as Peabody and its affiliates were
the sole owner prior to October 31, 2007.
Supplemental Financial Data (Unaudited)
For the Quarter Ended June 30, 2008 and 2007
Pro Forma
Historical Quarter
Quarter Ended Ended
June June June
2008 2007 2007
Tons Sold (In thousands)
Appalachia Mining Operations 3,723 3,574 3,574
Illinois Basin Mining Operations 2,138 1,771 1,771
Total 5,861 5,345 5,345
Revenue Summary (Dollars in thousands)
Appalachia Mining Operations $253,137 $196,980 $204,411
Illinois Basin Mining Operations 75,332 58,486 58,486
Appalachia Other 11,211 755 755
Total $339,680 $256,221 $263,652
Revenues per Ton - Mining Operations
Appalachia $67.99 $55.11 $57.19
Illinois Basin 35.23 33.02 33.02
Total 56.04 47.80 49.19
Operating Costs per Ton - Mining
Operations (1)
Appalachia $53.86 $49.56 $49.77
Illinois Basin 33.94 32.29 32.29
Total 46.60 43.85 43.99
Segment Adjusted EBITDA per Ton - Mining
Operations
Appalachia $14.13 $5.55 $7.42
Illinois Basin 1.29 0.73 0.73
Total 9.44 3.95 5.20
Dollars in Thousands
Past Mining Obligation Expense $21,622 $38,350 $22,450
Capital Expenditures (Excludes
Acquisitions) 21,392 10,116 10,116
(1) Operating costs are the direct costs of our mining operations,
excluding costs for past mining obligations, asset retirement
obligations, and depreciation, depletion and amortization.
Pro forma results include transactions associated with the company's
spin-off from Peabody Energy, which was effective October 31, 2007. For
the quarter ended June 30, 2007, pro forma results include a $7.4 million
increase to revenues from repricing of a major coal supply agreement; a
$15.6 million reduction of operating costs associated with the assumption
by Peabody Energy of certain retiree healthcare liabilities; and a $3.4
million reduction of selling and administrative costs for Patriot's
stand-alone management and administrative structure and functions. Pro
forma financial information was derived from the company's historical
combined financial statements and includes these adjustments, among
others, to present results as if the spin-off of Patriot Coal from
Peabody Energy occurred on January 1, 2007.
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
Supplemental Financial Data (Unaudited)
For the Six Months Ended June 30, 2008 and 2007
Pro Forma
Historical Six Months
Six Months Ended Ended
June June June
2008 2007 2007
Tons Sold (In thousands)
Appalachia Mining Operations 6,903 7,224 7,224
Illinois Basin Mining Operations 4,043 3,870 3,870
Total 10,946 11,094 11,094
Revenue Summary (Dollars in thousands)
Appalachia Mining Operations $465,899 $398,433 $412,025
Illinois Basin Mining Operations 141,671 126,074 126,074
Appalachia Other 16,444 1,377 1,377
Total $624,014 $525,884 $539,476
Revenues per Ton - Mining Operations
Appalachia $67.49 $55.15 $57.04
Illinois Basin 35.04 32.58 32.58
Total 55.51 47.28 48.50
Operating Costs per Ton - Mining
Operations (1)
Appalachia $54.47 $49.15 $49.35
Illinois Basin 33.04 30.50 30.50
Total 46.56 42.65 42.77
Segment Adjusted EBITDA per Ton - Mining
Operations
Appalachia $13.02 $6.00 $7.69
Illinois Basin 2.00 2.08 2.08
Total 8.95 4.63 5.73
Dollars in Thousands
Past Mining Obligation Expense $43,743 $76,722 $44,922
Capital Expenditures (Excludes
Acquisitions) 33,422 26,486 26,486
(1) Operating costs are the direct costs of our mining operations,
excluding costs for past mining obligations, asset retirement
obligations, and depreciation, depletion and amortization.
Pro forma results include transactions associated with the company's
spin-off from Peabody Energy, which was effective October 31, 2007. For
the six months ended June 30, 2007, pro forma results include a $13.6
million increase to revenues from repricing of a major coal supply
agreement; a $31.1 million reduction of operating costs associated with
the assumption by Peabody Energy of certain retiree healthcare
liabilities; and a $6.3 million reduction of selling and administrative
costs for Patriot's stand-alone management and administrative structure
and functions. Pro forma financial information was derived from the
company's historical combined financial statements and includes these
adjustments, among others, to present results as if the spin-off of
Patriot Coal from Peabody Energy occurred on January 1, 2007.
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
Condensed Consolidated Balance Sheets
June 30, 2008 and December 31, 2007
(Dollars in thousands)
June 30, December 31,
2008 2007
(Unaudited)
Cash and cash equivalents $2,993 $5,983
Receivables 163,179 125,985
Inventories 34,518 31,037
Other current assets 11,791 6,214
Restricted cash 193,100 -
Total current assets 405,581 169,219
Net property, plant, equipment and mine
development 876,895 876,289
Notes receivable 132,960 126,381
Investments and other assets 52,527 27,948
Total assets $1,467,963 $1,199,837
Short-term borrowings $20,000 $-
Accounts payable and accrued liabilities 212,093 184,519
Total current liabilities 232,093 184,519
Long-term debt, less current maturities 210,453 11,438
Other noncurrent liabilities 925,257 921,564
Total liabilities 1,367,803 1,117,521
Common stock, paid-in capital and accumulated
deficit 169,303 156,356
Accumulated other comprehensive loss (69,143) (74,040)
Total stockholders' equity 100,160 82,316
Total liabilities and stockholders'
equity $1,467,963 $1,199,837
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
Reconciliation of Net Income (Loss) to EBITDA
For the Three and Six Months Ended June 30, 2008 and 2007
(Dollars in thousands)
(Unaudited) Pro Forma
Historical Quarter
Quarter Ended Ended
Reconciliation of net income (loss) June June June
to EBITDA: 2008 2007 2007
Net income (loss) $11,815 $(5,814) $9,398
Depreciation, depletion and amortization 20,905 19,560 18,993
Asset retirement obligation expense 3,259 3,640 3,640
Interest income (3,621) (2,120) (2,120)
Interest expense 5,216 1,963 3,213
Income tax provision 3,507 - 10,107
Minority interests - 1,579 1,579
EBITDA $41,081 $18,808 $44,810
Pro Forma
Historical Six Months
Six Months Ended Ended
Reconciliation of net income (loss) June June June
to EBITDA: 2008 2007 2007
Net income (loss) $8,749 $(17,765) $15,871
Depreciation, depletion and amortization 39,515 40,918 40,041
Asset retirement obligation expense 6,675 9,295 9,295
Interest income (6,870) (4,766) (4,766)
Interest expense 7,538 4,788 5,355
Income tax provision 2,595 - 17,055
Minority interests - 2,653 2,653
EBITDA $58,202 $35,123 $85,504
EBITDA is defined as net income (loss) before deducting interest expense
and income, income taxes, minority interests, asset retirement obligation
expense and depreciation, depletion and amortization. We have included
information concerning EBITDA because we believe that in our industry such
information is a relevant measurement of a company's operating financial
performance and liquidity. Because EBITDA is not calculated identically
by all companies, our calculation may not be comparable to similarly
titled measures of other companies. The table above reflects the
company's calculation of EBITDA.
Pro forma results include transactions associated with the company's
spin-off from Peabody Energy, which was effective October 31, 2007. These
results include a $7.4 million and $13.6 million increase to revenues for
the three and six months ended June 30, 2007, respectively, from repricing
of a major coal supply agreement; a $15.6 million and $31.1 million
reduction of operating costs for the three and six months ended June 30,
2007, respectively, associated with the assumption by Peabody Energy of
certain retiree healthcare liabilities; and a $3.4 million and $6.3
million reduction of selling and administrative costs for the three and
six months ended June 30, 2007, respectively, for Patriot's stand-alone
management and administrative structure and functions. Pro forma
financial information was derived from the company's historical combined
financial statements and includes these adjustments, among others, to
present results as if the spin-off of Patriot Coal from Peabody Energy
occurred on January 1, 2007.
This information is intended to be reviewed in conjunction with the
company's filings with the Securities and Exchange Commission.
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