For the three months ended June 30, 2009, Alpha reported coal revenues of $333.9 million and net income of $15.4 million, or $0.22 per diluted share. This compares with $604.7 million of coal revenues and net income of $67.1 million, or $0.94 per diluted share, in the second quarter of 2008, which were record highs for the company.

Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) from continuing operations for the quarter just ended totaled $68.2 million, compared with a record $143.8 million in the second quarter of 2008. A reconciliation of EBITDA from continuing operations to income from continuing operations, the most closely related GAAP measure, is provided in a table included with the accompanying financial schedules.

For the six months ended June 30, 2009, Alpha recorded coal revenues of $758.3 million compared with $1,027.1 million in the same period of 2008. Net income for the first half of 2009 was $56.3 million ($0.79 per diluted share), compared with net income of $92.7 million ($1.35 per diluted share) in the first half of 2008. EBITDA from continuing operations for the six months ended June 30, 2009 was $177.8 million, compared with $232.3 million in the first six months of 2008.

"As we predicted earlier this year, the persistence of weak demand conditions greatly reduced metallurgical and thermal coal shipments in the second quarter," said Michael Quillen, Alpha's chairman and CEO. "While global business conditions certainly aren't anywhere near where they were at this time last year, we have seen encouraging early signs of a turnaround in the steel markets and renewed interest from coal buyers, which had been mostly absent to this point."

Kevin Crutchfield, Alpha's president, added: "Alpha's been somewhat insulated from the sharp drop in coal-based electricity generation in this recession due to pricing on thermal contracts that were settled in vastly more favorable conditions last year. So pricing has held up for the utility business and continues to compare quite favorably to last year."

                  Quarterly Financial & Operating Highlights              (in millions, except per-share and per-ton amounts)                                           Q2        Q2        Q1                                         2009      2008      2009                                         ----      ----      ----    Coal revenues                        $333.9    $604.7    $424.4    Income from continuing operations     $16.7     $70.6     $46.6    Net income                            $15.4     $67.1     $41.0    Earnings per diluted share            $0.22     $0.94     $0.58    EBITDA from continuing operations     $68.2    $143.8    $109.7    Tons of coal produced and  processed    4.0       5.8       5.2    Tons of coal sold                       4.3       7.3       5.2    Coal margin per ton                  $15.53    $23.24    $23.48   

All amounts have been adjusted for discontinued operations and the second quarter 2008 amounts for Income from continuing operations, Net income, Earnings per diluted share, and EBITDA from continuing operations have been adjusted for the adoption of FSP APB 14-1 on January 1, 2009.

A reconciliation of EBITDA from continuing operations to income from continuing operations is included in a table accompanying the financial schedules.

   Financial Performance - Second Quarter     --  Total revenues in the second quarter were $386.2 million, compared       with $701.8 million in the same period last year. Coal revenues were       down 45 percent due to substantially lower price realizations for       metallurgical coal and total coal shipments that were off 3.0 million       tons from last year's record level. Other revenues of $16.9 million       were up 52 percent from last year, mostly because of higher revenues       from the company's coal terminaling and road construction businesses.       Freight and handling revenues of $35.4 million were down $50.6 million       period-over-period on the basis of lower shipments. These revenues are       offset in their entirety by an equivalent cost and have no effect on       the company's profitability.     --  Total costs and expenses for the most recent quarter of $354.4 million       were $231.6 million, or 40 percent, lower than the second quarter of       2008.  Cost of coal sales accounted for $167.2 million of the decline,       due to the 41 percent decline in tons sold period-over-period.       Included in costs and expenses for the quarter just ended was a $14.5       million unrealized gain related to changes in the fair value of       derivative contracts, which compared with a gain of $6.5 million in       the second quarter of 2008.     --  Depreciation, depletion and amortization (DD&A) of $36.4 million was       $6.5 million less than last year because of lower depletion expense       associated with reduced mine output. Selling, general and       administrative (SG&A) expenses for the most recent quarter of $22.9       million were $2.2 million higher than the second quarter last year,       primarily due to professional fees related to the proposed merger with       Foundation Coal.     --  Interest expense (net) increased by $1.5 million in the most recent       quarter, mostly because of higher interest income earned last year.     --  In the second quarter of 2008, the company used the net proceeds from       the public offering of the 2.375% convertible senior notes due 2015       and the concurrent offering of common stock, in part, to repurchase       Alpha's 10% senior notes due 2012, resulting in a $14.7 million loss       on the early extinguishment of debt.     --  Income tax expense for continuing operations for the quarter just       ended was $5.3 million, compared with $22.0 million in the comparable       period last year. The company's effective income tax rate for the       quarter just ended was 24.1 percent, compared with 23.8 percent in the       second quarter of 2008.     --  Loss from discontinued operations for the second quarter was $1.3       million, $2.2 million less than the comparable period in 2008. A       reduction in the activities associated with the closure of the       Whitetail Kittanning mine was the main reason for the lower loss.     Production and Sales - Second Quarter     --  Coal margin per ton, a key profitability measure for the company,       declined 33 percent in the quarter just ended, as the company's       higher-margin metallurgical shipments slipped and pricing declined       approximately $30 per ton from last year's level, offsetting a 37       percent improvement in thermal coal pricing period-over-period.       Margins were also impacted by a 5 percent increase in cost of coal       sales per ton. Compared to the first quarter of 2009, coal margin per       ton was off 34 percent. The company's overall average realized price       per ton for the quarter was $77.58, down 6 percent from last year and       5 percent from the preceding quarter.     --  For the quarter just ended, produced and processed tons (representing       company and contractor-operated mines and coal purchased at our       processing plants) of 4.0 million tons were down 31 percent from the       same period last year and 24 percent lower than the first quarter of       this year, as Alpha adjusted mine production schedules and in some       cases accelerated vacation schedules to meet lower shipping levels.       Reduced demand levels also resulted in cuts to outside coal purchases       of 1.2 million tons period-over-period and 182,000 tons sequentially.     --  The company's average cost of coal sales per ton in the most recent       quarter increased 5 percent from the comparable period in 2008, and 6       percent sequentially. Produced and processed costs were impacted by       fixed costs applied to lower production levels, which partly resulted       from shutdowns taken at company mines during the second quarter. The       unit cost of outside coal purchases, which tracks coal market prices,       were down nominally from last year but dropped 18 percent       sequentially.                      Quarterly and YTD Production and Sales Data                      (in thousands, except per-ton amounts)                     Q2       Q2     %       Q1     %     YTD    YTD      %                   2009     2008  Change   2009  Change  2009   2008   Change                   ----     ----  ------   ----  ------  ----   ----   ------   Production   Produced/    processed     3,988    5,780  -31%    5,223  -24%   9,210   11,436  -19%   Purchased        211    1,455  -85%      393  -46%     604    2,520  -76%      Total       4,199    7,235  -42%    5,616  -25%   9,814   13,956  -30%    Tons Sold   Steam          2,830    4,099  -31%    3,146  -10%   5,976    7,806  -23%   Metallurgical  1,473    3,237  -54%    2,024  -27%   3,498    5,973  -41%      Total       4,303    7,336  -41%    5,170  -17%   9,474   13,779  -31%    Coal revenue/    ton   Steam         $69.83   $51.13   37%   $67.70    3%  $68.71   $50.78   35%   Metallurgical $92.46  $122.06  -24%  $104.47  -11%  $99.41  $105.60   -6%      Total      $77.58   $82.43   -6%   $82.09   -5%  $80.05   $74.54    7%    Cost of coal    sales/ton(1)   Alpha Mines   $60.54   $54.66   11%   $55.12   10%  $57.60   $52.36   10%   Contract    Mines(2)     $73.56   $71.56    3%   $73.86    0%  $73.73   $65.35   13%      Total       Produced       and       processed $61.73   $57.04    8%   $57.08    8%  $59.19   $54.08    9%   Purchased     $66.66   $67.47   -1%   $81.39  -18%  $74.69   $64.96   15%      Total      $62.05   $59.19    5%   $58.61    6%  $60.17   $56.10    7%    Coal margin    per ton(3)   $15.53   $23.24  -33%   $23.48  -34%  $19.88   $18.44    8%    (1) Excludes changes in fair value of derivative instruments, freight &       handling costs, cost of other revenues, DD&A and SG&A   (2) Includes coal purchased from third parties and processed at our plants       prior to resale   (3) Coal revenue per ton less cost of coal sales per ton   *All amounts have been adjusted for discontinued operations.    Year-to-Date Results     --  For the first six months of this year, Alpha posted total revenues of       $872.9 million, including $758.3 million in coal revenues. For the       comparable period in 2008, total revenues were $1,194.8 million and       coal revenues were $1,027.1 million. Lower shipments of both       metallurgical and thermal coal were the primary drivers of the decline       in coal revenues. Other revenues of $33.1 million for the first six       months of the year represented a 47 percent improvement over last       year, mostly because of higher revenues from the company's coal       terminaling and road construction businesses.     --  Coal sales volumes for the first six months of 2009 totaled 9.5       million tons, down 4.3 million tons, or 31 percent, from the first       half of 2008.  Metallurgical coal shipments were off 41 percent while       thermal coal shipments were off 23 percent. Coal purchases were       curtailed by 76 percent in the first half of this year compared with       last year. Unit cost of coal sales for the first six months of 2009       was $60.17, up 7 percent from the first six months of 2008, while the       company's overall average realized price per ton increased by 7       percent. Alpha's coal margin per ton for the first half of 2009       reached $19.88, 8 percent better than the first half of 2008.    Liquidity and Capital Resources   

Cash provided by operations for the quarter ended June 30, 2009 was $13.8 million, compared with $137.7 million in the second quarter of 2008. Cash from operations (including discontinued operations) through the first half of 2009 was $57.6 million, compared with $179.4 million for the first six months of 2008.

The company continues to manage to a lower level of capital outlays given the current business environment. Capital expenditures for the quarter just ended totaled $28.0 million and $46.1 million for the first six months of 2009, compared with $40.4 million and $74.2 million for the same periods last year.

The company had available liquidity of $1,029.3 million at June 30, 2009, including cash of $667.4 million and $361.9 million available under the company's credit facility, subject to limitations described in the facility. Total debt outstanding at June 30, 2009 was $445.5 million, compared with $451.3 million at December 31, 2008. Debt for both periods is net of debt discount in the amount of $82.5 million and $87.8 million, respectively.

Outlook

A generally weak quarter for metallurgical coal ended on a high note with June shipments up 600,000 tons from May levels. Positive signals from the steel, coke and coking coal markets colored the back end of the second quarter and have extended into the current quarter. Among recent developments:

   --  A survey of steel buyers published earlier this month pointed to a       sharp change in sentiment that inventory levels have been sufficiently       depleted. Through June, total U.S. steel inventory levels had dropped       more than 44 percent from last year, though anemic demand from end       users has kept days-of-inventory levels fairly stable.   --  With U.S. steel prices up 17 percent from their May lows, steel       manufacturing is slowly ramping up off all-time lows, with mill       capacity utilization crossing the 50 percent threshold earlier this       month.   --  Globally, the world export price for hot rolled steel product in the       middle of this month had risen by $87/metric tonne from the low       reached in early May. From news reports, Alpha estimates about a dozen       idle blast furnaces resumed production in June and July.   --  Chinese imports of coking coal have surged and are running at triple       the rate of last year on an annualized basis while in Australia,       China's traditional supply source, congestion is once again plaguing       the country's main coal-exporting facilities. While the U.S.