Nov. 3, 2009 (PR Newswire) -- ABINGDON, Va., Nov. 3 /PRNewswire-FirstCall/ -- Alpha Natural Resources, Inc. (NYSE: ANR), a leading U.S. coal producer, reported a third quarter net loss of $19.5 million or $0.19 per diluted share, which includes the impact of various merger-related expenses, compared to net income of $67.4 million or $0.93 per diluted share last year. The third quarter 2009 loss from continuing operations was $20.0 million or $0.19 per diluted share compared to income from continuing operations of $66.1 million or $0.91 per diluted share in the third quarter of 2008. Excluding merger-related expenses and other unusual items, third quarter 2009 adjusted income from continuing operations was $49.4 million, or $0.47 per diluted share.

Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) from continuing operations for the quarter just ended totaled $112.6 million, compared to $122.3 million in the year ago period. Excluding merger-related expenses and other unusual items, third quarter 2009 adjusted EBITDA from continuing operations was $160.7 million.

For the quarter, the Company incurred merger-related expenses and other unusual items, including $42.4 million of pre-tax merger-related expenses, a net $58.0 million pre-tax expense for amortization of acquired coal supply agreements, a $23.5 million pre-tax non-cash charge arising from the termination of hedge accounting for an interest rate swap, a $5.6 million pre-tax expense for loss on the early extinguishment of debt, and a $22.2 million benefit arising from the reversal of a deferred income tax asset valuation allowance. The following table compares the Company's third quarter 2009 results from continuing operations as reported with the Company's results from continuing operations excluding these merger-related expenses and other unusual items.

(millions, except per-share amounts)

As         As
Reported   Adjusted*
Income (loss) from continuing operations               ($20.0)     $49.4

Net income (loss) from continuing operations per
diluted share                                         ($0.19)     $0.47

EBITDA from continuing operations                      $112.6     $160.7

Reported financial results for the third quarter of 2009 include three months of results from Alpha's pre-merger operations (Alpha stand-alone) and two months of results from the acquired Foundation operations. As a result of the timing of the closing of the Alpha/Foundation merger on July 31, 2009, third quarter 2009 results will not be comparable to historical or future periods.

Quarterly Financial & Operating Highlights
(millions, except per-share and per-ton amounts)

Q3        Q3     Q2
2009      2008   2009
Coal revenues                                     $662.4    $601.5 $333.9
Income (loss) from continuing operations          ($20.0)    $66.1  $16.7
Net income (loss)                                 ($19.5)    $67.4  $15.4
Net income  (loss) per diluted share              ($0.19)    $0.93  $0.22
Adjusted income from continuing operations*        $49.4     $48.5  $19.8
Adjusted income from continuing operations per
diluted share*                                    $0.47     $0.67  $0.28
EBITDA from continuing operations*                $112.6    $122.3  $68.2
Adjusted EBITDA from continuing operations*       $160.7    $110.9  $72.3
Tons of coal sold                                   16.5       6.9    4.3
Coal margin per ton                               $11.72    $23.08 $15.53

All quarters have been adjusted for discontinued operations and the third
quarter 2008 amounts have been adjusted for the adoption of ASC 470-20 on
January 1, 2009.  Coal revenues and coal margin per ton for all periods
have been adjusted to reflect a change in the income statement
presentation of gains and losses on derivatives.

*These are non-GAAP financial measures provided as additional relevant
information about the Company's performance.  Management believes that
adjusted EBITDA from continuing operations, adjusted income from
continuing operations and adjusted income from continuing operations per
share are more representative of the Company's performance trends and
enhance comparability to peer companies, and are, therefore, useful to
investors.  A reconciliation of adjusted income (loss) from continuing
operations to income from continuing operations, and a reconciliation of
both EBITDA from continuing operations and adjusted EBITDA from continuing
operations to income from continuing operations are included in tables
accompanying the financial schedules.

"Alpha's strong third quarter 2009 performance is particularly noteworthy in light of the continued weakness in the domestic thermal coal market and the fact that we closed our merger with Foundation Coal at the end of July, creating the third largest U.S. coal company by most measurements," said Kevin Crutchfield, Alpha's Chief Executive Officer. "The ability to deliver strong quarterly results, exclusive of merger-related and other unusual items, is a testament to the hard work and dedication of our entire workforce which is now 6,200 strong. I am pleased to report that Alpha's new and significantly increased scale has not altered our focus on safety. Both organizations were on pace for record safety performance prior to the merger, and the favorable trend continues. During the quarter Eagle Butte celebrated two years without a lost time accident representing more than one million man hours, and Belle Ayr recently celebrated one year without a lost time accident representing approximately 800,000 man hours."

"We will continue to pursue a pragmatic and restrained approach to production in the current market environment in which decreased coal-fired generation and high utility inventories have significantly reduced demand for thermal coal. However," Mr. Crutchfield continued, "in the last few months interest in metallurgical coal appears to have picked up markedly, discussions with metallurgical coal customers have increased, and order flow is beginning to result from this heightened activity. Accordingly, we are increasing our guidance for metallurgical coal shipments in 2010 to a range of 10 to 12 million tons, a one million ton increase from the previous guidance range of 9 to 11 million tons. As the largest U.S. supplier of metallurgical coal, Alpha remains highly leveraged to this market, and with 54% of our metallurgical coal uncommitted for 2010, we believe current market developments position Alpha favorably to capitalize on this opportunity.

"Finally, I would like to thank everyone that contributed to the success of our merger with Foundation Coal early in the third quarter. We were able to close the transaction in just two and a half months, while at the same time putting together a detailed plan for integration which will serve as a model for Alpha as we execute our growth strategy in the future. Since closing, we succeeded in our goal of finalizing the integration decision making process by the end of September; the management team is in place; and, we are positioned to execute as a unified company from this point forward."

Financial Performance - Third Quarter

-- Total revenues in the third quarter were $729.2 million compared to
$688.4 million for Alpha stand-alone in the same period last year,
and coal revenues were $662.4 million compared to $601.5 million
for Alpha stand-alone in the third quarter of 2008.  Coal revenues
in the third quarter 2009, while higher than the year ago period due
to the inclusion of former Foundation operations which added $277.9
million, were negatively impacted by lower thermal coal shipment
levels in all regions from the operations of both organizations
given reduced demand.  Third quarter revenues also reflect lower
metallurgical coal shipments, which were 2.1 million tons on a
combined company basis in the third quarter 2009 compared with 3.0
million tons for Alpha stand-alone in the year ago period, and lower
average realizations per ton from the sale of metallurgical coal.

-- Total costs and expenses for the most recent quarter were $748.1
million versus $606.7 million for Alpha stand-alone in the year ago
period.  Cost of coal sales of $469.5 million compares favorably to
$441.1 million for Alpha stand-alone in the third quarter of 2008,
reflecting lower production levels across the operations of both
predecessor companies, effective cost controls, increased
operational efficiencies and the inclusion of Foundation Coal
operations which resulted in an improved coal margin that increased
from 26.7 percent for Alpha stand-alone last year to 29.1 percent in
the third quarter of 2009.

Total costs and expenses in the third quarter include $42.4 million
of pre-tax merger-related expenses, including direct transaction
costs, consulting and professional services fees, stock-based
compensation charges, integration-related expenses, severance and
relocation-related costs.  These merger-related expenses are
primarily reflected in higher selling, general and administrative
expense (SG&A), which was $83.5 million in the most recent quarter,
versus $20.9 million for Alpha stand-alone in the third quarter of
2008.  In addition, a net $58.0 million pre-tax expense for
amortization of acquired coal supply agreements was recorded in the
third quarter due to acquisition accounting rules which required the
Company to record Foundation's coal contracts at fair value as of
the acquisition date.  The resulting net intangible asset of $494.3
million as of July 31, 2009 will be amortized and expensed as the
contracted tons of coal are shipped. This non-cash amortization will
continue for several quarters, with the impact diminishing over time
as the underlying coal supply agreements are fulfilled.

-- Depreciation, depletion and amortization (DD&A) of $78.2 million
during the quarter compares with $40.2 million for Alpha stand-alone
in the year ago period, reflecting the combination of the Alpha and
Foundation assets, including property, plant and equipment and
mineral rights, as well as some acquisition accounting impacts
spread over the life of the various assets.

-- Contained within other revenues and other expenses was a total
unrealized gain of $3.4 million from changes in the fair value of
derivative instruments in the most recent quarter compared with an
unrealized loss of $34.3 million in last year's third quarter.

-- Other non-operating expense increased to $47.3 million in the most
recent quarter, up from $6.6 million for Alpha stand-alone in the
third quarter last year.  Higher other non-operating expense was
primarily driven by the combined company's pre-tax interest expense
of $42.8 million, including a $23.5 million pre-tax non-cash charge
arising from the termination of hedge accounting for an interest
rate swap, compared to pre-tax interest expense of $9.7 million for
Alpha stand-alone in the third quarter of 2008.  In addition, Alpha
incurred a $5.6 million pre-tax expense for loss on the early
extinguishment of debt associated with the write-off of deferred
debt issuance costs triggered by the repayment of the Alpha stand-
alone Term Loan done in conjunction with the merger.

-- The income tax benefit from continuing operations for the quarter
just ended was $46.2 million, versus income tax expense of $9.1
million for Alpha stand-alone in the third quarter last year.  Third
quarter 2009 income tax benefit from continuing operations includes
an estimated $38.1 million benefit related to the tax impact of the
various merger-related and unusual charges described above, as well
as a $22.2 million benefit arising from the reversal of a deferred
income tax asset valuation allowance.  The reversal of the valuation
allowance was triggered by Alpha moving from a net deferred tax
asset position to a net deferred tax liability position on its
consolidated balance sheet as a result of the acquisition accounting
for the merger.

Sales, Average Realizations and Cost of Coal Sales Per Ton - Third Quarter

--  For the quarter just ended, the combined company sold 16.5 million tons
of coal, including 8.6 million tons of Powder River Basin (PRB) coal,
5.8 million tons of Eastern steam coal, and 2.1 million tons of Eastern
metallurgical coal.  The former Foundation operations shipped a total of
11.7 million tons in the two months post-merger.  On a stand-alone
basis, Alpha sold 4.0 million tons and 3.0 million tons of Eastern steam
coal and Eastern metallurgical coal, respectively, in the third quarter
of 2008.
--  The Company's average per ton realization in the most recent quarter was
$40.25, versus $86.58 in the year ago period, primarily reflecting the
influence in the third quarter 2009 of two months of PRB sales at an
average per ton realization of $10.39.  The average per ton realization
for Eastern steam coal sold during the most recent quarter was $64.43
compared to $52.10 in the third quarter of 2008, and the average per ton
realization for Eastern metallurgical coal sold during the third quarter
was $96.92 versus $132.35 last year.

--  Cost of coal sales per ton in the third quarter averaged $8.08 for PRB
mines and $50.62 for Eastern mines (including brokered coal).  The
year-over-year decrease in the cost of coal sales for Eastern mines
mainly reflects the inclusion of results from former Foundation's
relatively lower cost longwall mines in the Pittsburgh #8 seam for the
months of August and September.  In addition, production and brokered
coal curtailments have been primarily from higher cost mines and
purchased coal sources.

Year-to-Date Results

--  For the first nine months of this year, Alpha reported total revenues of
$1.6 billion, including $1.4 billion in coal revenues.  For the first
nine months of 2008, total revenues were $1.9 billion and coal revenues
were $1.6 billion.  Lower shipments of both metallurgical and thermal
coal were the primary drivers of the decline in coal revenues, somewhat
offset by the addition of two months of revenues from the former
Foundation operations, which added $0.3 billion.

--  Coal sales volumes for the first nine months of 2009 totaled 25.9
million tons, including 11.7 million tons from the former Foundation
operations during the months of August and September, compared with 20.7
million tons in the first three quarters of 2008 for Alpha stand-alone.
Metallurgical coal shipments were 5.6 million tons year-to-date through
September, down 38 percent compared to the year-to-date 2008 period,
despite the inclusion of former Foundation's metallurgical coal sales of
0.1 million tons for two months. The unit cost of coal sales for the
first nine months of 2009 was $40.09 per ton.  Alpha's coal margin for
the first three quarters of 2009 was $14.80 per ton or 27.0 percent.

Liquidity and Capital Resources

Cash provided by operations (including discontinued operations) for the quarter ended September 30, 2009 was $104.5 million, compared with $156.4 million in the third quarter of 2008. Cash from operations (including discontinued operations) through the first three quarters of 2009 was $162.1 million, compared with $335.8 million for the first nine months of 2008.

Through the third quarter of 2009 Alpha continued to limit capital expenditures to match reduced production levels in light of reduced coal demand in the current market environment. Capital expenditures (including discontinued operations) for the quarter and nine months ended September 30, 2009 were $56.7 million and $102.8 million, respectively, versus $39.4 million and $113.6 million in the third quarter and first nine months of 2008.

The Company had available liquidity of $954.5 million as of September 30, 2009, including cash and cash equivalents of $481.6 million and $472.9 million available under the Company's revolving credit facility.