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Coal Margins Continue to Expand
PITTSBURGH, July 27 /PRNewswire-FirstCall/ -- CONSOL Energy Inc. (NYSE:CNX), a high-Btu bituminous coal and coalbed methane company, reported earnings of $105.9 million, or $0.57 per diluted share, for its second quarter ended June 30, 2006, compared with $41.1 million, or $0.22 per diluted share for the same period a year earlier, an increase of nearly 160 percent.
Net cash from operating activities was $196.6 million for the quarter just ended, compared with $61.8 million for the June 2005 quarter, an increase of approximately 218 percent.
FINANCIAL RESULTS - Period-To-Period Comparison
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
Total Revenue and
Other Income $932.3 $817.1 $1,918.2 $1,634.1
Net Income $105.9 $41.1 $230.4 $116.3
Earnings Per Share
(Diluted) $0.57 $0.22 $1.24 $0.63
Net Cash from
Operating Activities $196.6 $61.8 $349.1 $157.4
EBITDA $231.2 $123.8 $490.1 $283.1
EBIT $156.7 $57.0 $343.8 $152.9
Capital Expenditures $149.3 $112.7 $319.1 $169.6
Other Investing
Cash Flows ($1.0) ($38.4) ($35.3) ($16.3)
In millions of dollars except per share. Amounts for capital expenditures
do not include amounts for equity affiliates. Other investing cash flows
represents net cash used in or (provided by) investing activities less
capital expenditures and includes: Additions to Mineral Leases;
Investment in Equity Affiliates; Changes in Restricted Cash and Proceeds
from Sales of Assets.
"We are very pleased with the solid second quarter financial results," said J. Brett Harvey, president and chief executive officer. Total Revenue and Other Income grew approximately 14 percent, primarily due to higher realized pricing for coal and natural gas. Operating margins (average realized price per ton less operating costs per ton) for CONSOL Energy's coal operations were nearly $15 per ton during the quarter, an increase of approximately 15 percent period-to-period, as average coal prices period-to- period were $2.84 per ton higher.
Harvey said he was particularly pleased with the period-to-period improvement in realized pricing per ton in conjunction with a reduction in total cost per ton. "Our stated goal of margin expansion is evident in this quarter's coal operations results. We were able to realize nearly $3 per ton more this year versus last year's second quarter while slightly reducing total cost per ton produced."
Period-To-Period Analysis of Financial Results for the Quarter
Total revenue and other income improved 14.1 percent, primarily reflecting higher realized pricing for both the coal and gas segments. During the quarter, the Company recognized $25 million of business interruption insurance proceeds related to the fire at the Buchanan Mine in March 2005.
Total costs increased 0.5 percent.
Cost of goods sold (including Purchased Gas and Gas Royalty Interests' Costs) decreased 3.7 percent, primarily reflecting lower purchased gas costs period-to-period, partially offset by higher operating costs related to labor, supplies and contract mining fees and royalties.
Depreciation, depletion and amortization increased 11.5 percent, primarily reflecting various coal assets and other projects placed in service after the 2005 period.
Taxes other than income increased 17.6 percent, primarily due to higher severance and other taxes attributable to higher sales prices and higher volumes for the coal and gas segments.
As of June 30, 2006, CONSOL Energy had no short-term debt and had $830 million in total liquidity, which is comprised of $345 million of cash, an available accounts receivable securitization facility of $125 million and $360 million available to be borrowed under its $750 million bank facility.
Coal Operations
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
Total Coal Sales
(millions of tons) 17.5 17.4 35.7 35.1
Sales - Company-Produced
(millions of tons) 17.2 17.0 35.0 34.4
Coal Production
(millions of tons) 18.0* 16.5 36.2 34.7
Average Realized Price
Per Ton -
Company-Produced $38.33 $35.49 $39.07 $35.28
Operating Costs Per Ton $23.48 $22.62 $23.82 $22.06
Non-operating Charges
Per Ton $4.10 $4.94 $4.17 $4.71
DD&A Per Ton $2.97 $3.06 $2.90 $2.77
Total Cost Per Ton -
Company-Produced $30.55 $30.62 $30.89 $29.54
Operating Margins
Per Ton $14.85 $12.87 $15.25 $13.22
Financial Margins
Per Ton $7.78 $4.87 $8.18 $5.74
Sales and production includes CONSOL Energy's portion from equity
affiliates. Operating costs include items such as labor, supplies,
power, preparation costs, project accruals, subsidence costs, gas well
plugging costs, charges for employee benefits (including Combined Fund
premium), royalties, production and property taxes. Non-operating
charges include items such as charges for long-term liabilities, direct
administration, selling and general administration. Operating Margins
Per Ton are defined as Average Realized Price Per Ton less Operating
Costs Per Ton. Financial Margins Per Ton are defined as Average Realized
Price Per Ton Less Total Costs Per Ton - Company Produced. *Includes
1.3 million tons of metallurgical grade coal.
Coal segment performance improved in the quarter-to-quarter comparison, driven by higher realized prices and higher sales, and was partially offset by higher operating costs per ton of production.
Sales of Company-produced coal increased 0.2 million tons, period-to- period.
Average realized prices increased $2.84, or 8.0 percent, reflecting higher pricing for steam and metallurgical coal.
Total costs per ton for Company-produced coal were nearly flat period-to- period and down 2.1 percent from the previous quarter. The Company's total cost per ton continues to track internal plans. "Cost control is a key component in our plan to expand margins," Harvey said. "In addition, we have targeted efficiency projects underway at several operations that should further mitigate cost pressures."
He said he expected unit cost increases at the Company's large underground mines in Northern Appalachia to be less than two percent year-over-year. "Our Central Appalachian average unit costs increases will be somewhat higher because we have brought on some high margin, but higher cost production," he said. "In addition, we have similar labor and geologic challenges to other producers in the region. However, I still expect our overall unit cost increases to be modest compared with current industry experience in the Appalachian Basin."
Operating margins (average realized price per ton less operating costs per ton) were $14.85 per ton, an improvement of 15.4 percent period-to-period, while financial margins (average realized price less total costs) were $7.78 per ton, an increase of 59.8 percent period-to-period.
During the second quarter, the following mines began a vacation period on June 24, 2006 that ended on July 8, 2006: Shoemaker; McElroy; Blacksville; Loveridge; and Amonate.
Gas Operations
CNX Gas Corporation (NYSE:CXG), 81.5 percent of which is owned by CONSOL Energy, reported net income to CONSOL Energy of $31.1 million for the quarter ended June 30, 2006. CNX Gas Corporation issued its earnings release on July 26, 2006.
Additional information regarding CNX Gas Corporation financial and operating results for the quarter are available in their release and can be found in the investor section of their website: http://www.cnxgas.com/
Developments During the Quarter
In April, CONSOL Energy idled production at the Shoemaker Mine near Moundsville, WV. Approximately 170 workers were part of the workforce reduction out of a total of 319 employees. The remaining employees will continue to work on the installation of the new belt haulage system, which is expected to be completed in early 2009.
Also in April, the VP8 mine was placed on long-term idle as a result of mining all of its currently economical reserves. The VP8 mine is located near Rowe, VA and is a metallurgical mine.
In May, CONSOL Energy's Board of Directors approved a two-for-one stock split of the Company's common stock effected in the form of a stock dividend and distributed on May 31, 2006.
In June, CONSOL Energy announced it had signed a new long-term sales agreement with FirstEnergy Corp. under which CONSOL Energy will supply a total of more than 128 million tons of high-Btu coal to FirstEnergy for a twenty- year period beginning in 2009 and running through 2028. The new agreement will replace an existing coal supply agreement that took effect in January 2003 and was scheduled to run through 2020. Under the new agreement, CONSOL Energy will increase its coal shipments by approximately two million tons per year to provide coal for FirstEnergy's 2410 megawatt Bruce Mansfield Plant in Shippingport, Pennsylvania, and other power plants. The coal will be shipped from three CONSOL Energy mines in West Virginia: the McElroy Mine near Moundsville; the Blacksville #2 Mine near Wana; and the Robinson Run Mine near Shinnston.
On June 27, 2006, Standard & Poor's added CONSOL Energy to the S&P 500 equity index.
Outlook
In the tables below, the Company provides certain financial and production guidance measures. These measures are based on the Company's current estimates and are subject to change based on changing circumstances and on risks associated with the business that are described at the end of this news release. Production guidance for 2007, 2008, and 2009 has not been revised. The Company revises production guidance for out-year production annually in January.
GUIDANCE
2006 2007 2008 2009
Estimate Estimate Estimate Estimate
COAL
Tons Produced (millions
of tons) 69.3 - 71.3 67 - 71 68 - 72 74 - 78
Tons Committed (millions
of tons at July 11, 2006) 69.0 53.4 41.5 31.8
Tons Committed and Priced
(millions of tons at
July 11, 2006) 68.9 51.2 34.8 20.3
Avg. Realized Price/Ton
Committed & Priced $38.68 $38.70 $39.60 $42.30
2006 Quarterly Production Guidance
1Q Actual 2Q Actual 3Q Estimate 4Q Estimate
Coal (millions of tons) 18.2 18.0 16.1 - 17.1 17.0 - 18.0
The following mines will take a one-week vacation period during the third quarter ending September 30, 2006: Bailey and Enlow Fork. The following mines will take a two-week vacation period during the third quarter: Mine 84; Robinson Run; and Emery.
The long-term supply and demand situation for coal in the United States is favorable for CONSOL Energy as new coal-fueled power generation projects continue to be announced and existing power plants are retrofitted with emission control technologies. However, because of the mild winter and a slow start to the summer cooling season in the eastern United States, power generators have been able to increase their coal inventories closer to historical levels. This has led to short-term pressure on spot pricing. However, with recent hot and humid weather in the U.S., particularly in the Northeast, there is some evidence to suggest that inventories at coal-fired power plants are in the early stages of a reduction.
There is only a limited relationship between spot pricing and CONSOL Energy's long-term contract pricing. Spot prices in CONSOL Energy's key markets, while volatile, represent a small portion of total coal sales. Moreover, CONSOL Energy does not publicly report its contract prices, including production from the Pittsburgh Seam that accounts for more than 80 percent of the Company's annual coal production.
"Short-term fluctuations in the coal markets are not expected to affect our long-term strategic direction," Harvey said. "We have more than 95% of our 2006 production priced and committed." He also noted the Company's recent announcement of a twenty-year contract with FirstEnergy for 128 million tons of high-Btu coal is the third large-scale agreement that the Company has signed since the beginning of the year. "This contract highlights our strategy of providing our power generation customers with a secure, long-term source of coal as they complete their scrubber retrofits."
Harvey noted that CONSOL Energy's strong balance sheet, low cost structure, near-term sales commitment position in coal and strong cash flow enable the Company to be extremely disciplined in pricing its coal. "We are in a strong position to manage short-term fluctuations in coal markets to control the long-term value of our coal," he said. "In the next few years, we expect to focus on targeted capital efficiency projects rather than large capacity expansion projects while our power generation customers complete the installation of scrubbers."
CONSOL Energy continues to monitor scrubber retrofit announcements by power generators east of the Mississippi River. "Many of the scrubber retrofits are being accelerated, particularly in CONSOL's key markets," Harvey said. "There are now more than 82 gigawatts located east of the Mississippi River of planned capacity scheduled to be scrubbed by 2012. When all of the retrofits are completed, it will bring the total scrubbed gigawatts to over 130 gigawatts, which equates to over 300 million tons of market for high-Btu coal."
CONSOL Energy also has a strategic focus on non-conventional opportunities for coal. There are currently more than a dozen coal-to-liquids (CTL) and coal-to-gas (CTG) projects in various stages of planning. Analysts estimate that it would take 475 million tons of coal per year to replace 10 percent of the liquid fuel in the U.S. "With the ongoing geopolitical events and the risk to the energy supply to the United States, interest in CTL and CTG facilities from the federal government, for both civilian and military purposes, continues to gain momentum as a way to reduce exposure to foreign energy sources," Harvey noted. "We can participate in a meaningful way in future projects because our large reserve base in several basins positions us well to serve these new plants."
Harvey said that over the longer term, demand from conventional and non- conventional coal customers is expected to be robust as scrubbers come online in CONSOL Energy's key markets, new coal-fired power plants are constructed and CTL and CTG projects are developed in the U.S. "Beginning in 2008, we can re-price a substantial portion of our existing capacity to capitalize on those future opportunities. Moreover, our financial flexibility and substantial reserve base allows us to expand capacity as these new markets grow."
However, he said the Company will continue to manage its business to reflect the ebbs and flows of the market. "While we have the ability to expand production to meet the needs of a growing market, we have the discipline to scale-back production plans if short-term market conditions warrant."
Finally, Harvey reported that the Company has repurchased shares of the Company's common stock under the previously announced two-year stock repurchase program that commenced in January 2006 and is authorized through December 31, 2007. "Year to date, the Company has repurchased nearly 2.6 million shares at an average price of $32.78. We are one-fourth of the way through the authorized buyback period and we've repurchased more than $83.6 million of the $300 million authorization."
CONSOL Energy Inc., a member of the Standard & Poor's 500 equity index, has annual revenues of $3.8 billion. The Company was named one of America's most admired companies in 2005 by Fortune magazine. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the Company's innovative reclamation practices in 2002 and 2003. Also in 2003, the Company was listed in Information Week magazine's "Information Week 500" list for its information technology operations. In 2002, the Company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the Company can be found at its web site: http://www.consolenergy.com/.
Definition: EBIT is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that it is useful to an investor in evaluating CONSOL Energy because it is widely used to evaluate a company's operating performance before debt expense and its cash flow. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT or EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies. Reconciliation of EBITDA and EBIT to the income statement is as follows:
CONSOL Energy Inc.
EBIT & EBITDA
(000) Omitted
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
6/30/06 6/30/05 6/30/06 6/30/05
Net Income $105,934 $41,074 $230,380 $116,286
Add: Interest Expense 6,253 7,189 12,106 14,113
Less: Interest Income (4,105) (838) (7,701) (1,585)
Add: Income Taxes 48,647 9,613 109,034 24,088
Earnings Before
Interest & Taxes(EBIT) 156,729 57,038 343,819 152,902
Add: Depreciation,
Depletion & Amortization 74,448 66,780 146,264 130,159
Earnings Before Interest,
Taxes and DD&A (EBITDA) $231,177 $123,818 $490,083 $283,061
For purposes of this press release, references to "CONSOL Energy," the "Company," "we," "our," or "us" or similar words (other than the legal names of companies) shall include CONSOL Energy Inc. and its respective subsidiaries.
Forward-Looking Statements
Various statements in this release, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this release speak only as of the date of this release; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. These risks, uncertainties and contingencies include, but are not limited to, the following:
- the disruption of rail, barge and other systems that deliver our coal,
or pipeline systems which deliver our gas;
- our inability to hire qualified people to meet replacement or expansion
needs;
- the risks inherent in coal mining being subject to unexpected
disruptions, including geological conditions, equipment failure, timing
of completion of significant construction or repair of equipment,
fires, accidents and weather conditions which could cause our results
to deteriorate;
- uncertainties in estimating our economically recoverable coal and gas
reserves;
- risks in exploring for and producing gas;
- obtaining governmental permits and approvals for our operations;
- a loss of our competitive position because of the competitive nature of
the coal industry and the gas industry, or a loss of our competitive
position because of overcapacity in these industries impairing our
profitability;
- an extended decline in prices we receive for our coal and gas affecting
our operating results and cash flows;
- a decrease in the production of our metallurgical coal or a decrease in
the price of metallurgical coal could impact our profitability;
- the inability to produce a sufficient amount of coal to fulfill our
customers' requirements which could result in our customers initiating
claims against us;
- replacing our natural gas reserves which if not replaced will cause our
gas reserves and gas production to decline;
- costs associated with perfecting title for gas rights in some of our
properties;
- we need to use unproven technologies to extract coalbed methane on some
of our properties;
- location of a vast majority of our gas producing properties in two
counties in southwestern Virginia, making us vulnerable to risks
associated with having our gas production concentrated in one area;
- we do not insure against all potential operating risks;
- other persons could have ownership rights in our advanced gas
extraction techniques which could force us to cease using those
techniques or pay royalties;
- reliance on customers extending existing contracts or entering into new
long-term contracts for coal;
- reliance on major customers;
- our inability to collect payments from customers if their
creditworthiness declines;
- coal users switching to other fuels in order to comply with various
environmental standards related to coal combustion;
- the effects of government regulation;
- the effects of mine closing, reclamation and certain other liabilities;
- the coalbeds from which we produce methane gas frequently contain water
that may hamper production;
- increased exposure to employee related long-term liabilities;
- our participation in multi-employer pension plans may expose us to
obligations beyond the obligation to our employees;
- lump sum payments made to retiring salaried employees pursuant to our
defined benefit pension plan;
- the outcome of various asbestos litigation cases;
- our ability to comply with laws or regulations requiring that we obtain
surety bonds for workers' compensation and other statutory
requirements;
- the anti-takeover effects of our rights plan could prevent a change of
control; and
- other factors discussed in our 2005 Form 10-K under "Risk Factors,"
which is on file at the Securities and Exchange Commission.
We are including this cautionary statement in this release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us.
CONSOL ENERGY INC. AND SUBSIDIARIES
(Unaudited)
CONSOLIDATED STATEMENTS of INCOME
(Dollars in thousands - except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Sales - Outside $824,390 $708,591 $1,693,591 $1,436,939
Sales - Gas Royalty
Interests 12,686 9,066 28,493 18,742
Sales - Purchased Gas 9,778 44,975 32,130 69,257
Sales - Related Party - 614 - 614
Freight - Outside 37,689 31,665 74,768 61,789
Other Income 47,720 22,238 89,169 46,796
Total Revenue and
Other Income 932,263 817,149 1,918,151 1,634,137
Cost of Goods Sold and
Other Operating Charges
(exclusive of depreciation,
depletion and amortization
shown below) 543,906 533,177 1,093,456 1,052,154
Purchased Gas Costs 9,986 45,592 32,751 70,086
Gas Royalty Interests'
Costs 10,267 7,026 23,683 14,463
Freight Expense 37,689 31,665 74,768 61,789
Selling, General and
Administrative Expense 21,911 18,797 41,991 35,186
Depreciation,
Depletion and
Amortization 74,448 66,780 146,264 130,159
Interest Expense 6,253 7,189 12,106 14,113
Taxes Other Than
Income 66,156 56,236 138,156 115,813
Total Costs 770,616 766,462 1,563,175 1,493,763
Earnings Before Income
Taxes and Minority
Interest 161,647 50,687 354,976 140,374
Income Taxes 48,647 9,613 109,034 24,088
Earnings Before
Minority Interest 113,000 41,074 245,942 116,286
Minority Interest (7,066) - (15,562) -
Net Income $105,934 $41,074 $230,380 $116,286
Basic Earnings
Per Share $0.58 $0.22 $1.25 $0.64
Dilutive Earnings
Per Share $0.57 $0.22 $1.24 $0.63
Weighted Average Number
of Common Share
Outstanding:
Basic 183,286,425 182,873,976 183,775,190 182,382,952
Dilutive 185,820,234 185,168,622 186,156,863 184,535,874
Dividends Paid Per
Share $0.07 $0.07 $0.14 $0.14
CONSOL ENERGY INC. AND SUBSIDIARIES
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months Ended
June 30,
2006 2005
Operating Activities:
Net Income $230,380 $116,286
Adjustments to Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation, Depletion
and Amortization 146,264 130,159
Stock-based Compensation 6,259 1,797
Gain on the Sale of Assets (3,112) (10,653)
Change in Minority Interest 15,562 -
Amortization of Mineral Leases 3,397 3,661
Deferred Income Taxes 14,677 (772)
Equity in Earnings of Affiliates (719) (1,818)
Changes in Operating Assets:
Accounts Receivable
Securitization - (110,000)
Accounts and Notes
Receivable (8,156) (20,077)
Inventories (43,097) (13,757)
Prepaid Expenses (4,061) (8,028)
Changes in Other Assets (2,019) 766
Changes in Operating Liabilities:
Accounts Payable (51,097) (16,425)
Other Operating
Liabilities (12,503) 49,895
Changes in Other Liabilities 51,081 37,630
Other 6,228 (1,216)
Net Cash Provided by
Operating Activities 349,084 157,448
Investing Activities:
Capital Expenditures (294,384) (169,562)
Acquisition of Mon River
Towing and J.A.R. Barge
Lines (24,750) -
Additions to Mineral Leases (4,190) (6,352)
Net Investment in Equity
Affiliates 103 (6,838)
Proceeds from Sales of Assets 39,374 29,471
Net Cash Used in Investing
Activities (283,847) (153,281)
Financing Activities:
Payments on Miscellaneous
Borrowings (83) (166)
Payments on Revolver - (1,700)
Tax Benefit from Stock-Based
Compensation 35,796 -
Dividends Paid (25,784) (25,468)
Issuance of Treasury Stock 11,730 21,437
Purchases of Treasury Stock (83,631) -
Stock Options Exercised 1,362 -
Issuance of Treasury Stock
Net Cash Used in Financing
Activities (60,610) (5,897)
Net Increase (Decrease) in Cash and
Cash Equivalents 4,627 (1,730)
Cash and Cash Equivalents at
Beginning of Period 340,640 6,422
Cash and Cash Equivalents at End of
Period $345,267 $4,692
CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands - except per share data)
(Unaudited)
JUNE 30, DECEMBER 31,
2006 2005
ASSETS
Current Assets:
Cash and Cash Equivalents $345,267 $340,640
Accounts and Notes Receivable:
Trade 278,066 276,277
Other Receivables 32,257 23,340
Inventories 184,977 140,976
Deferred Income Taxes 144,914 152,730
Prepaid Expenses 68,676 64,537
Total Current Assets 1,054,157 998,500
Property, Plant and Equipment:
Property, Plant and Equipment 7,417,798 7,096,660
Less - Accumulated Depreciation,
Depletion and Amortization 3,691,411 3,561,897
Total Property, Plant and
Equipment - Net 3,726,387 3,534,763
Other Assets:
Deferred Income Taxes 336,144 367,228
Investment in Affiliates 52,877 52,261
Other 137,373 134,900
Total Other Assets 526,394 554,389
TOTAL ASSETS $5,306,938 $5,087,652
CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands - except per share data)
(Unaudited)
JUNE 30, DECEMBER 31,
2006 2005
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $147,596 $197,375
Current Portion of Long-Term Debt 56,844 4,629
Accrued Income Taxes 24,206 17,557
Other Accrued Liabilities 566,845 584,361
Total Current Liabilities 795,491 803,922
Long-Term Debt:
Long-Term Debt 393,652 438,367
Capital Lease Obligations 30,534 -
Total Long-Term Debt 424,186 438,367
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than
Pensions 1,597,997 1,592,907
Pneumoconiosis Benefits 403,908 411,022
Mine Closing 381,674 356,776
Workers' Compensation 139,171 134,759
Deferred Revenue 19,436 27,343
Salary Retirement 49,883 33,703
Reclamation 29,376 32,183
Other 129,815 137,870
Total Deferred Credits and
Other Liabilities 2,751,260 2,726,563
Minority Interest 116,939 93,444
Total Liabilities and Minority
Interest 4,087,876 4,062,296
Stockholders' Equity:
Common Stock, $.01 par value;
1,000,000,000 Shares Authorized,
185,125,990 Issued and 183,336,487
Outstanding at June 30, 2006;
185,050,824 Issued and Outstanding
at December 31, 2005 1,851 1,850
Preferred Stock, 15,000,000 Shares
Authorized; None Issued and Outstanding - -
Capital in Excess of Par Value 905,135 883,316
Retained Earnings 454,907 252,109
Other Comprehensive Loss (84,371) (105,162)
Unearned Compensation on Restricted
Stock Units - (6,757)
Common Stock in Treasury, at Cost -
1,789,503 Shares at June 30, 2006
and - 0 - Shares at December 31, 2005 (58,460) -
Total Stockholders' Equity 1,219,062 1,025,356
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,306,938 $5,087,652
CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands - except per share data)
Other
Compre-
Capital in Retained hensive
Common Excess of Earnings Income
Stock Par Value (Deficit) (Loss)
Balance -
December 31, 2005 $1,850 $883,316 $252,109 $(105,162)
(Unaudited)
Net Income - - 230,380 -
Treasury Rate Lock
(Net of $27 tax) - - - (41)
Minority Interest in Other
Comprehensive Income and
Stock-based Compensation of
Gas - (1,996) - (4,734)
Gas Cash Flow Hedge
(Net of ($16,428) tax) - - - 25,566
Comprehensive Income (Loss) - (1,996) 230,380 20,791
Issuance of Treasury Stock - (11,643) (1,798) -
Purchases of Treasury Stock - - - -
Stock Options Exercised 1 1,361 - -
Tax Benefit from Stock-Based
Compensation - 35,796 - -
Amortization of Stock-Based
Compensation Awards - 5,058 - -
Elimination of Unearned
Compensation on Restricted
Stock Units - (6,757) - -
Dividends ($.14 per share) - - (25,784) -
Balance -
June 30, 2006 $1,851 $905,135 $454,907 $(84,371)
CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands - except per share data)
Unearned
Compen- Total
sation on Stock-
Restricted Treasury holders'
Stock Units Stock Equity
Balance -
December 31, 2005 $(6,757) $- $1,025,356
(Unaudited)
Net Income - - 230,380
Treasury Rate Lock
(Net of $27 tax) - - (41)
Minority Interest in Other
Comprehensive Income and
Stock-based Compensation of Gas - - (6,730)
Gas Cash Flow Hedge
(Net of ($16,428) tax) - - 25,566
Comprehensive Income (Loss) - - 249,175
Issuance of Treasury Stock - 25,171 11,730
Purchases of Treasury Stock - (83,631) (83,631)
Stock Options Exercised - - 1,362
Tax Benefit from Stock-Based
Compensation - - 35,796
Amortization of Stock-Based
Compensation Awards - - 5,058
Elimination of Unearned
Compensation on Restricted
Stock Units 6,757 - -
Dividends ($.14 per share) - - (25,784)
Balance -
June 30, 2006 $- $(58,460) $1,219,062
SPECIAL INCOME STATEMENT
2nd Quarter 2006
In Millions
Quarter Ended June 30, 2006
COAL
Total Total
Produced Other Total Gas Other TOTAL
Sales $661 $18 $679 $102 $52 $833
Gas Royalty Interests - - - 13 - 13
Freight Revenue 38 - 38 - - 38
Other Income - 23 23 15 10 48
Total Revenue and Other
Income 699 41 740 130 62 932
Cost of Goods Sold 401 53 454 42 58 554
Gas Royalty Interests' Costs - - - 10 - 10
Freight Expense 38 - 38 - - 38
Selling, General & Admin. 15 - 15 4 3 22
DD&A 54 7 61 9 4 74
Interest Expense - - - - 6 6
Taxes Other Than Income 42 17 59 4 3 66
Total Cost 550 77 627 69 74 770
Earnings Before Income Taxes $149 $(36) $113 $61 $(12) 162
Income Tax (49)
Earnings Before Minority Interest 113
Minority Interest (7)
Net Income $106
SPECIAL INCOME STATEMENT
June 2006 YTD
In Millions
Year to Date June 30, 2006
COAL
Total Total
Produced Other Total Gas Other TOTAL
Sales $1,359 $41 $1,400 $227 $99 $1,726
Gas Royalty Interest - - - 28 - 28
Freight Revenue 75 - 75 - - 75
Other Income - 57 57 19 13 89
Total Revenue and Other
Income 1,434 98 1,532 274 112 1,918
Cost of Goods Sold 829 112 941 82 103 1,126
Gas Royalty Interests' Costs - - 24 - 24
Freight Expense 75 - 75 - - 75
Selling, General & Admin. 28 1 29 7 6 42
DD&A 108 12 120 18 8 146
Interest Expense - - - - 12 12
Taxes Other Than Income 86 38 124 8 6 138
Total Cost 1,126 163 1,289 139 135 1,563
Earnings Before Income Taxes $308 $(65) $243 $135 $(23) 355
Income Tax (109)
Earnings Before Minority
Interest 246
Minority Interest (16)
Net Income $230
CONSOL Energy Inc.
Financial and Operating Statistics
Quarter Ended June 30,
2006 2005
AS REPORTED FINANCIALS:
Revenue ($ MM) $932.263 $817.149
EBIT ($MM) $156.729 $57.038
EBITDA ($ MM) $231.177 $123.818
Net Income / (Loss) ($ MM) $105.934 $41.074
EPS(diluted) $0.57 $0.22
Average shares outstanding - Dilutive 185,820,234 185,168,622
CAPEX ($ MM) $149.282 $112.693
COAL OPERATIONAL:
# Complexes Producing (end of period) 14 18
Sales (MM tons)-Produced only 17.221 17.005
Average sales price* ($/ton) $38.33 $35.49
Production income ($/ton) $7.78 $4.87
Production (MM tons)-Produced only 17.964 16.495
Produced Tons Ending inventory
(MM tons)** 2.813 1.745
* note: average sales price of tons produced
** note: includes equity companies
PRODUCTION REPORT
COAL 2nd Quarter 2nd Quarter
(Millions of Tons) 2006 Actual 2005 Actual
Northern Appalachia 14.4 13.7
Central Appalachia 3.2 2.5
Other Areas 0.3 0.3
Total 18.0 16.5
* Numbers may not add due to rounding
DATASOURCE: CONSOL Energy Inc.
CONTACT: Thomas F. Hoffman, +1-412-831-4060, or Charles E. Mazur, Jr.,
+1-412-831-4340, both of CONSOL Energy
Web site: http://www.consolenergy.com/
http://www.cnxgas.com/