PITTSBURGH, Jan. 26 /PRNewswire-FirstCall/ -- CONSOL Energy Inc.
(NYSE:CNX), a high-Btu bituminous coal and coalbed methane company,
reported earnings of $87.6 million, or $0.94 per diluted share, for
its fourth quarter ended December 31, 2005, compared with $67.7
million, or $0.74 per diluted share for the same period a year
earlier. The company reported record annual earnings of $580.9
million, or $6.26 per diluted share, for 2005 compared with $198.6
million, or $2.18 per diluted share, for 2004. Net cash from
operating activities was $218.7 million for the quarter just ended,
compared with $162.8 million for the December 2004 quarter.
FINANCIAL RESULTS - Period-To-Period Comparison Twelve Twelve
Quarter Quarter Months Months Ended Ended Ended Ended December 31,
December 31, December 31, December 31, 2005 2004 2005 2004 Total
Revenue and Other Income $969.1 $791.4 $3,810.4 $2,776.7 Earnings
Before Effect of Accounting Change $87.6 $67.7 $580.9 $115.2 Net
Income $87.6 $67.7 $580.9 $198.6 Earnings Per Share (Diluted) $0.94
$0.74 $6.26 $2.18 Net Cash from Operating Activities $218.7 $162.8
$409.1 $358.1 EBITDA $190.6 $140.2 $926.3 $389.0* EBIT $123.0 $44.0
$664.5 $108.6* Capital Expenditures $236.2 $111.5 $523.5 $410.6
Other Investing Cash Flows ($2.6) $5.7 ($449.1) ($10.1) 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; Proceeds from
Sales of Assets and Proceeds of $420.2 million from sale of 18.5%
of CNX Gas. *Before cumulative effect of accounting change. "The
fourth quarter was a strong quarter and 2005 was a watershed year
for us in many respects," said J. Brett Harvey, president and chief
executive officer. "During the year, our mines performed well,
energy prices continued to rise, and we executed our plan to
establish the value of our gas business. In addition, the long term
market for Northern Appalachian coal began to evolve as we had
forecasted allowing us to secure, in January of this year, a major
multi-year contract for high sulfur coal going to scrubbed power
plants." Harvey noted that several mines or complexes set
production records for the year. "Bailey Mine set a new record of
11.1 million tons," Harvey said, "and the Bailey/Enlow Complex set
a new record of 20.9 million tons." In addition, Harvey said that
records were set at the McElroy Mine (10.4 million tons), the
Loveridge Mine (6.4 million tons) and the Emery Mine (1.2 million
tons). He said performance at these mines helped offset the
estimated loss of approximately 2.5 million tons from the Buchanan
Mine due to problems that occurred there during the year. "McElroy,
Loveridge and the Bailey/Enlow complex are all facilities in which
we have made significant capital investments in the past three
years," Harvey explained. "Our record of capital investment is one
of putting our dollars to work in the right places at the right
time." Energy prices, in particular, were a strong driver in CONSOL
Energy's fourth quarter and full year results. "Coal prices
period-to-period were up more than $4.50 for the quarter just ended
and more than $5.50 for the full year," Harvey noted "This is a
very robust pricing environment," he said. "It has enabled us to
price our short-term and long-term coal sales at levels that will
continue to provide top line growth." Harvey also explained that
long-term coal markets are beginning to recognize the substantial
value of Northern Appalachian coals. "This January, we executed a
major, long-term contract with American Electric Power (AEP) for
Northern Appalachian coal with a high sulfur content. We were able
to do this deal because AEP, as it completes its scrubber projects,
was looking for long- term, reliable supplies of coal close to
their plants." Harvey said he believes that other similar
transactions are in the offing. "As scrubbers are added to existing
plants, more power plant operators in the east will seek the
advantage of fueling with high-Btu coal that is close to their
plants." Period-To-Period Analysis of Financial Results for the
Quarter Total revenue and other income improved 22.5 percent,
primarily reflecting higher prices for produced coal and gas and
increased revenue from the purchase of gas (offset by a
commensurate increase in cost of goods sold for purchased gas).
Total costs increased 11.7 percent. Cost of goods sold (including
Purchased Gas Costs) increased 20.5 percent, primarily reflecting
higher costs related to Purchased Gas (offset by a commensurate
increase in Purchased Gas Revenue), higher costs for produced coal
(reflecting increased supply and labor costs) and higher taxes and
royalties that increased as prices rose. Depreciation, depletion
and amortization decreased 29.7 percent, primarily attributable to
the acceleration of depreciation for equipment and facilities at
Rend Lake and other idled mine locations in the 2004 period.
Interest expense decreased $1.4 million, or 17.5 percent,
reflecting lower amounts of borrowing throughout the 2005 period.
Taxes other than income increased 6.2 percent, reflecting higher
coal and gas production taxes related to increases in coal and gas
sales prices. As of December 31, 2005, CONSOL Energy had no
short-term debt and had $855.9 million in total liquidity, which is
comprised of $340.6 million of cash, an available accounts
receivable securitization facility of $102.7 million and $412.6
million available to be borrowed under its $750 million bank
facility. Coal Operations Twelve Twelve Quarter Quarter Months
Months Ended Ended Ended Ended December 31, December 31, December
31, December 31, 2005 2004 2005 2004 Total Coal Sales (millions of
tons) 18.0 19.1 70.5 69.5 Sales - Company-Produced (millions of
tons) 17.5 18.7 68.9 67.4 Coal Production (millions of tons) 17.7*
19.2 69.1 67.7 Average Realized Price Per Ton - Company- Produced
$36.28 $31.70 $35.61 $30.06 Operating Costs Per Ton $21.90 $19.36
$22.28 $20.40 Non-operating Charges Per Ton $5.12 $4.11 $4.93 $4.57
DD&A Per Ton $2.94 $2.49 $2.86 $2.57 Total Cost Per Ton -
Company-Produced ** $29.95 $25.96 $30.06 $27.54 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. *Includes .48 million tons of metallurgical grade
coal. **Amounts may not add due to rounding. Coal segment
performance improved in the quarter-to-quarter comparison,
reflecting higher realized prices for company-produced coal, offset
by lower coal sales, lower coal production and higher unit costs of
production. Sales of company-produced coal declined 1.2 million
tons, period-to- period, reflecting, in part, a decline of
approximately 1.0 million tons in production from the Buchanan Mine
related to a skip hoist problem that occurred in September and
caused production to be suspended for most of the quarter. Average
realized prices increased $4.58, or 14.4 percent, reflecting
improved contract and spot pricing. Total costs for
company-produced coal increased $3.98 per ton, or 15.3 percent,
primarily reflecting a 7.8 percent decrease in production volumes
(which tends to increase the unit cost impact of fixed costs), as
well as higher supply costs, reflecting additional maintenance work
done and higher prices for supplies, higher labor costs related to
increased man-counts, as well as higher production and other taxes
that rise as prices for coal rise. Operating margins (average
realized price less operating costs) were $14.38 per ton, an
improvement of 16.5 percent period-to-period, while financial
margins (average realized price less total costs) were $6.33 per
ton, an increase of 10.5 percent. "Margin expansion in coal
production is a goal we have pursued with great urgency because it
is a key driver in the overall profitability of the company,"
Harvey explained. Gas Operations CNX Gas Corporation (NYSE:CXG),
81.5 percent of which is owned by CONSOL Energy, reported net
income to CONSOL Energy of $26.5 million for the quarter ended
December 31, 2005, and $92.7 million for the calendar year 2005.
CNX Gas Corporation issued its earnings release on January 25,
2006. Additional information regarding CNX Gas Corporation
financial and operating results for the quarter and year just ended
are available in that release. "CNX Gas Corporation is off to a
strong start as an independent company," Harvey said. "Our
expectations for this investment remain very high." Developments
During the Quarter In September, the Buchanan Mine, near Mavisdale,
Virginia, suspended production following a problem with the mine's
skip hoist mechanism. The hoist was repaired and production resumed
on December 13, 2005. It is estimated that the mine lost
approximately 1.0 million tons of production during the period that
production was suspended. During that period, the company invoked
the force majeure provision on all sales contracts for Buchanan
Mine coal. In October, David C. Hardesty, president - West Virginia
University, was elected to the CONSOL Energy Board of Directors. In
December, the company's Board of Directors authorized a common
share repurchase program of up to $300 million during the 24-month
period beginning January 1, 2006 and ending December 31, 2007.
Subsequent Events In January, CONSOL Energy announced that it had
entered into a coal sales agreement with American Electric Power
(AEP) for the sale of up to 82.5 million tons of high-Btu
bituminous coal to various AEP coal-fired power stations over a
15-year period beginning in 2007 and running through 2021. The coal
will come from the Shoemaker and McElroy mines and will be shipped
to AEP power plants that have or will be equipped to have
scrubbers. As a result of the new contract, the company announced
that it will begin a major capital improvement project for the
Shoemaker Mine, replacing the mine's older, rail haulage system
with a new, more efficient conveyor belt haulage system. Also in
January, CONSOL Energy announced that it had agreed to purchase Mon
River Towing and J.A.R. Barge Lines, LP from the Guttman Group, a
private concern. The acquisition will increase the size of CONSOL
Energy's towboat fleet from 5 to 18 and increase the number of
barges from about 300 to more than 650, increasing coal
transportation capacity from 11 million tons to about 24 million
tons. The transaction closed on January 20, 2006. 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. GUIDANCE 2006 2007 2008
2009 Estimate Estimate Estimate Estimate FINANCIAL FORECAST
(millions) CAPEX (Total) $740 N.A. N.A. N.A. - Coal $490* N.A. N.A.
N.A. - Gas $165* N.A. N.A. N.A. - Land $65** N.A. N.A. N.A. - Other
$20 N.A. N.A. N.A. DD&A $285 N.A. N.A. N.A. COAL Tons Produced
(millions of tons) 70 -74 67 - 71 68 - 72 74 - 78 Tons Committed
(millions of tons at Jan. 17, 2006) 66.0 46.3 34.9 26.4 Tons
Committed and Priced (millions of tons at Jan. 17, 2006) 65.0 40.7
21.9 7.5 Av. Realized Price/Ton Committed & Priced $37.34
$37.99 $40.35 $40.93 *Does not include investments in equity
affiliates. **Includes approximately $12 million in land
acquisitions for gas operations. N.A. = Not Available 2006 COAL
CAPEX (forecast) CATEGORY 2006 Maintenance of Production $300
Expansion $120 Efficiency $45 Environmental and Safety $25 TOTAL
$490 2006 Quarterly Production Guidance 1Q Estimate 2Q Estimate 3Q
Estimate 4Q Estimate Coal (millions of tons) 17.2 - 18.2 18.2 -
19.2 16.3 - 17.3 18.3 - 19.3 Over the next two years, electricity
generation in the United States is forecast to grow approximately
2.0% per annum, absent any adverse weather impacts. According to
industry reports, coal inventories are significantly below normal
in the United States and could add 10-20 million tons of demand in
2006. Furthermore, natural gas prices remain high and make gas
powered generation more expensive than that of coal. These factors
should contribute to an already tight supply/demand balance for
U.S. thermal (steam) coal. The United States Energy Information
Administration (EIA) has forecasted that over the next four years
there are more than 12 gigawatts of planned capacity additions from
new generators that will use coal as an energy source -- requiring
an estimated 30 million tons of high-Btu coal per year. In
addition, there are nearly 50 gigawatts of existing coal-fired
power scheduled to be retrofitted with scrubbers over the same time
frame. CONSOL Energy expects to benefit from: the long-term demand
for high-Btu Northern Appalachia coal due to new and retrofitted
scrubbers on power plants geographically located near CONSOL's
mines; the growing demand for electricity generation as consumers
use more electricity-dependent devices; the geological limitations
of Central Appalachian coal; and the potential transportation
issues associated with lower Btu coal. "While the overall market
for coal remains positive, we believe the growth in demand for
Northern Appalachian coal will exceed the industry's organic growth
by a wide-margin," Harvey said. "The transaction with AEP that we
announced earlier this month is indicative of the way we see this
market evolving. Major coal-burning power generators are beginning
to move to the high-Btu products available close to their plants as
their scrubber construction projects are completed." On January 11,
2005, CONSOL Energy announced that it had entered into a 15-year
sales contract with American Electric Power (AEP) for up to 82.5
million tons of Northern Appalachian coal from CONSOL Energy's
Shoemaker and McElroy mines. Harvey said the company's ten-year
plan for Northern Appalachia is synchronized with the addition of
scrubbed power plant capacity being added. "While we are already
seeing some near-term market growth, by 2008, additional scrubbed
capacity will have grown significantly," he explained, "and will
continue to grow from there." The company has a significant amount
of its 2006 coal production already sold. "This year is a bridge
year for the higher sulfur Northern Appalachian coals," Harvey
said. "Sulfur dioxide allowance prices are high, which restricts
the market for the highest sulfur products such as those from
Shoemaker." He noted that scrubber capacity begins to come on line
by the end of this year. "Because of our sales position in 2006, we
are largely insulated from the effects of the current price of
allowances." Harvey also noted that Northern Appalachian coals have
a logistical advantage in many markets because the mines are
located close to customers and, in many instances, have access to
economical water transportation. "Our recent acquisition of Mon
River Towing more than doubles our capacity to move coal on the
rivers," he explained. "This gives us significant value in the
market. In addition, we see our river operations as a core
competency that will contribute to the bottom line." Looking at
forecasted capital spending, Harvey said that spending on coal
projects is similar to the cycle of spending made earlier. "The
production volumes and the earnings generation in coal this past
year were a result not only of our sustained investment in the
business," he said, "but also our investment in key expansion
projects that began in mid-2002." He noted that during this
multi-year period the company expanded the McElroy Mine and the
Bailey Central Processing plant as well as re-activating the
previously idled Loveridge Mine. Capital projects approved this
year are expected to result in the addition of nearly 15 million
tons of gross annual production over the next four years. "These
projects, many of which take several years to complete, allow us to
increase production at a measured, disciplined rate as well as
replace about 9 million tons of natural depletions or declines in
production from existing mines," Harvey said. Planned capital
spending for 2006 also is expected to have a positive impact on
coal unit costs. "We are forecasting an increase in cash costs per
ton of only 2.5 percent compared with 2005," Harvey said, "and an
increase in total costs of only 1.5 percent." He noted, however,
that achieving forecasted unit costs are dependent on achieving or
exceeding forecasted production volumes. Harvey said the forecast
for strong cash generation allows the company to fund its capital
spending entirely from internally generated funds. "In addition, we
will have free cash beyond our capital program to continue to
reward shareholders with the highest dividend among our coal peers,
as well as executing about half of our authorized share repurchase
program." Late last year, the company announced that the Board of
Directors had authorized the repurchase of up to $300 million of
the company's outstanding common shares during the two-year period
from January 1, 2006 through December 31, 2007. "We expect to use
the full authorization during that period," he concluded. CONSOL
Energy Inc. has annual revenues of $2.8 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 EBIT & EBITDA (000) Omitted Twelve
Twelve Quarter Quarter Months Months Ended Ended Ended Ended
12/31/05 12/31/04 12/31/05 12/31/04 Net Income/(Loss) $87,593
$67,668 $580,861 $198,582 Less: Cumulative Effect of Accounting
Change - - - ($83,373) Adjusted Net Income 87,593 67,668 580,861
115,209 Add: Interest Expense 6,413 7,776 27,317 31,429 Less:
Interest Income (4,045) (767) (8,066) (5,376) Add: Income Taxes
33,078 (30,682) 64,339 (32,646) Earnings Before Interest &
Taxes (EBIT) 123,039 43,995 664,451 108,616 Add: Depreciation,
Depletion & Amortization 67,592 96,187 261,851 280,397 Earnings
Before Interest, Taxes and DD&A (EBITDA) $190,631 $140,182
$926,302 $389,013 Forward-Looking Statements CONSOL Energy is
including the following cautionary statement 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, CONSOL Energy. With the
exception of historical matters, any matters discussed are
forward-looking statements (as defined in Section 21E of the
Exchange Act) that involve risks and uncertainties that could cause
actual results to differ materially from projected results. You can
identify these statements by forward-looking words such as "may,"
"will," "expect," "anticipate," "believe," "guidance," "forecast,"
"estimate," "intend," "predict," and "continue" or similar words.
These risks, uncertainties and contingencies include, but are not
limited to, the following: * the disruption of rail, barge and
other systems which 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, 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; * a decline in prices we receive for
our coal and gas affecting our operating results and cash flows; *
the inability to produce a sufficient amount of coal to fulfill our
customers' requirements which could result in our customers
initiating claims against us; * 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; * our inability to obtain additional
financing necessary in order to fund our operations, capital
expenditures, potential acquisitions and to meet our other
obligations; * the incurrence of losses in future periods; * the
effects of mine closing, reclamation and certain other liabilities;
* our ability to comply with restrictions imposed by our senior
credit facility; * increased exposure to employee related long-term
liabilities; * 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; *
results of class action lawsuits against us and certain of our
officers alleging that the defendants issued false and misleading
statements to the public and seeking damages and costs; * our
ability to service debt and pay dividends is dependent upon us
receiving distributions from our subsidiaries; and * the
anti-takeover effects of our rights plan could prevent a change of
control. CONSOL ENERGY INC. AND SUBSIDIARIES (Unaudited)
CONSOLIDATED STATEMENTS of INCOME (Dollars in thousands - except
per share data) Three Months Ended Twelve Months Ended December 31,
December 31, 2005 2004 2005 2004 Sales - Outside $782,764 $701,466
$2,977,833 $2,468,248 Sales - Purchased Gas 117,603 46,586 275,148
112,005 Sales - Related Party - - 4,749 - Freight - Outside 26,836
27,736 119,343 110,175 Freight - Related Party - - 468 - Other
Income 41,856 15,646 105,582 86,321 Gain on Sale of 18.5% of CNX
Gas - - 327,326 - Total Revenue and Other Income 969,059 791,434
3,810,449 2,776,749 Cost of Goods Sold and Other Operating Charges
(exclusive of depreciation, depletion and amortization shown below)
542,576 501,824 2,158,760 1,887,947 Purchased Gas Costs 118,981
47,094 278,720 113,063 Freight Expense 26,836 27,736 119,811
110,175 Selling, General and Administrative Expense 21,537 18,819
80,700 72,870 Depreciation, Depletion and Amortization 67,592
96,187 261,851 280,397 Interest Expense 6,413 7,776 27,317 31,429
Taxes Other Than Income 58,428 55,012 228,606 198,305 Total Costs
842,363 754,448 3,155,765 2,694,186 Earnings Before Income Taxes,
Minority Interest and Cumulative Effect of Change in Accounting
Principle 126,696 36,986 654,684 82,563 Income Taxes (Benefit)
33,078 (30,682) 64,339 (32,646) Earnings Before Minority Interest
and Cumulative Effect of Change in Accounting Principle 93,618
67,668 590,345 115,209 Minority Interest (6,025) - (9,484) -
Cumulative Effect of Change in Accounting for Workers' Compensation
Liability, net of Income Taxes of $53,080 - - - 83,373 Net Income
$87,593 $67,668 $580,861 $198,582 Basic Earnings Per Share $0.95
$0.75 $6.33 $2.20 Dilutive Earnings Per Share $0.94 $0.74 $6.26
$2.18 Weighted Average Number of Common Shares Outstanding: Basic
92,466,044 90,551,567 91,744,954 90,230,693 Dilutive 93,631,913
91,868,095 92,767,490 91,199,945 Dividends Paid Per Share $0.14
$0.14 $0.56 $0.56 CONSOL ENERGY INC. AND SUBSIDIARIES (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three
Months Ended Twelve Months Ended December 31, December 31, 2005
2004 2005 2004 Operating Activities: Net Income $87,593 $67,668
$580,861 $198,582 Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities: Cumulative Effect of Change in
Accounting Principle, net of tax - - - (83,373) Depreciation,
Depletion and Amortization 67,592 96,187 261,851 280,397
Compensation from Restricted Stock Unit Grants 942 438 3,596 1,153
(Gain) on the Sale of Assets (2,241) (2,063) (15,095) (40,841)
(Gain) on Sale of 18.5% Interest in Gas Segment - - (327,326) -
Change in Minority Interest 6,025 - 9,484 - Amortization of Mineral
Leases 509 613 4,483 4,907 Deferred Income Taxes 5,931 (28,936)
(4,644) (26,914) Equity in (Earnings) Losses of Affiliates (898)
366 (2,850) 4,317 Changes in Operating Assets: Accounts Receivable
Securitization - 22,700 (125,000) 17,000 Accounts and Notes
Receivable 15,908 (20,774) (31,900) (7,959) Inventories (3,041)
(11,493) (13,361) (18,544) Prepaid Expenses (10,743) 1,086 (28,148)
(2,734) Changes in Other Assets (12,310) 7,902 (6,525) 16,968
Changes in Operating Liabilities: Accounts Payable 17,418 26,443
22,725 54,459 Other Operating Liabilities 23,383 6,034 61,094
(24,936) Changes in Other Liabilities 20,274 (5,584) 15,317
(15,764) Other 2,375 2,171 4,524 1,373 Net Cash Provided by
Operating Activities 218,717 162,758 409,086 358,091 Investing
Activities: Capital Expenditures (236,205) (111,517) (523,467)
(410,611) Additions to Mineral Leases (1,503) (6,087) (9,329)
(10,354) Net Investment in Equity Affiliates 2,095 (1,511) 3,996
(4,303) Proceeds from Sale of 18.5% Interest in Gas Segment - -
420,167 - Proceeds from Sales of Assets 1,984 1,897 34,220 24,726
Net Cash Used in Investing Activities (233,629) (117,218) (74,413)
(400,542) Financing Activities: Payments on Miscellaneous
Borrowings (300) (116) (584) (4,651) Payments on Short Term
Borrowings (2,200) - - - Payments on Revolver - (43,300) (1,700)
(63,300) Proceeds from (Payments on) Long Term Notes 14,000 -
14,000 (45,000) Dividends Paid (12,944) (12,660) (51,321) (50,471)
Withdrawal from Restricted Cash - - - 190,918 Stock Options
Exercised 3,781 4,329 39,150 14,864 Net Cash Provided by (Used in)
Financing Activities 2,337 (51,747) (455) 42,360 Net (Decrease)
Increase in Cash and Cash Equivalents (12,575) (6,207) 334,218 (91)
Cash and Cash Equivalents at Beginning of Period 353,215 12,629
6,422 6,513 Cash and Cash Equivalents at End of Period $340,640
$6,422 $340,640 $6,422 CONSOL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands - except per
share data) (Unaudited) DECEMBER 31, DECEMBER 31, 2005 2004 ASSETS
Current Assets: Cash and Cash Equivalents $340,640 $6,422 Accounts
and Notes Receivable: Trade 276,277 111,580 Other Receivables
23,340 30,251 Inventories 140,976 121,902 Deferred Income Taxes
143,481 145,890 Recoverable Income Taxes - 14,614 Prepaid Expenses
64,537 39,510 Total Current Assets 989,251 470,169 Property, Plant
and Equipment: Property, Plant and Equipment 7,096,660 6,514,016
Less - Accumulated Depreciation, Depletion and Amortization
3,561,897 3,331,436 Total Property, Plant and Equipment - Net
3,534,763 3,182,580 Other Assets: Deferred Income Taxes 376,477
355,008 Investment in Affiliates 52,261 47,684 Other 134,900
140,170 Total Other Assets 563,638 542,862 TOTAL ASSETS $5,087,652
$4,195,611 CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands - except per share data) (Unaudited)
DECEMBER 31, DECEMBER 31, 2005 2004 LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts Payable $197,375 $166,068
Short-Term Notes Payable - 5,060 Current Portion of Long-Term Debt
4,629 3,885 Accrued Income Taxes 17,557 - Other Accrued Liabilities
560,584 530,472 Total Current Liabilities 780,145 705,485 Total
Long-Term Debt 438,367 425,760 Deferred Credits and Other
Liabilities: Postretirement Benefits Other Than Pensions 1,592,907
1,531,250 Pneumoconiosis Benefits 411,022 427,264 Mine Closing
356,776 305,152 Workers' Compensation 134,759 140,318 Deferred
Revenue 27,343 50,208 Salary Retirement 33,703 51,957 Reclamation
32,183 5,745 Other 161,647 83,451 Total Deferred Credits and Other
Liabilities 2,750,340 2,595,345 Minority Interest 93,444 - Total
Liabilities and Minority Interest 4,062,296 3,726,590 Stockholders'
Equity: Common Stock, $.01 par value; 500,000,000 Shares
Authorized, 92,525,412 Issued and Outstanding at December 31, 2005;
91,267,558 Issued and 90,642,939 Outstanding at December 31, 2004
925 913 Preferred Stock, 15,000,000 Shares Authorized; None Issued
and Outstanding - - Capital in Excess of Par Value 884,241 846,644
Retained Earnings (Deficit) 252,109 (277,406) Other Comprehensive
Loss (105,162) (89,193) Unearned Compensation on Restricted Stock
Units (6,757) (4,883) Common Stock in Treasury, at Cost - 0 Shares
at December 31, 2005, 624,619 Shares at December 31, 2004 - (7,054)
Total Stockholders' Equity 1,025,356 469,021 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,087,652 $4,195,611 CONSOL ENERGY INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands - except per share data) Other Unearned
Compre- Compen- Total Capital in Retained hensive sation on Stock-
Common Excess of Earnings Income Restricted Treasury holders' Stock
Par Value (Deficit) (Loss) Stock Units Stock Equity Balance -
December 31, 2004 $913 $846,644 $(277,406) $(89,193) $(4,883)
$(7,054) $469,021 (Unaudited) Net Income - - 580,861 - - - 580,861
Treasury Rate Lock (Net of $53 tax) - - - (80) - - (80) Minimum
Pension Liability (Net of ($4,301) tax) - - - 6,754 - - 6,754
Minority Interest in OCI of Gas - - - 6,432 - - 6,432 Gas Cash Flow
Hedge (Net of $18,664 tax) - - - (29,075) - - (29,075)
Comprehensive Income (Loss) - - 580,861 (15,969) - - 564,892
Dividend Equivalents on Restricted Stock Units (1,814 units) - 276
- - (276) - - Issuance of Restricted Stock Units under the Equity
Incentive Plan (94,691 shares) - 4,270 - - (4,270) - - Stock
Options Exercised (1,883,673 shares) 12 32,084 - - - 7,054 39,150
Stock-Based Compensation from Accelerated Vesting - 735 - - - - 735
Common Stock Issued (4,946 shares) - 225 - - - - 225 Amortization
of Restricted Stock Unit Grants - (18) - - 2,672 - 2,654 Dividends
($.56 per share) - 25 (51,346) - - - (51,321) Balance - December
31, 2005 $925 $884,241 $252,109 $(105,162) $(6,757) $ - $1,025,356
PRODUCTION REPORT COAL 4th Quarter 4th Quarter (Millions of Tons)
2005 Actual 2004 Actual Northern Appalachia 14.9 15.4 Central
Appalachia 2.5 3.6 Other Areas 0.3 0.2 Total 17.7 19.2 SPECIAL
INCOME STATEMENT December QTR In Millions Three Months Ended
December 31, 2005 COAL Total Total Produced Other Total Gas Other
TOTAL Sales $629 $20 $649 $217 $34 $900 Freight Revenue 27 - 27 - -
27 Other Income - 40 40 2 - 42 Gain (Loss) on Sale of 18.5% of CNX
Gas - - - - - - Total Revenue and Other Income 656 60 716 219 34
969 Cost of Goods Sold 400 64 464 150 47 661 Freight Expense 27 -
27 - - 27 Selling, General & Admin. 15 - 15 3 4 22 DD&A 51
5 56 9 3 68 Interest Expense - - - - 6 6 Taxes Other Than Income 40
12 52 4 2 58 Total Cost 533 81 614 166 62 842 Earnings (Loss)
Before Income Taxes $123 $(21) $102 $53 $(28) $127 Income Tax (33)
Earnings Before Minority Interest 94 Minority Interest (6) Net
Income $88 SPECIAL INCOME STATEMENT December YTD In Millions Year
to Date December 31, 2005 COAL Total Total Produced Other Total Gas
Other TOTAL Sales $2,448 $79 $2,527 $602 $129 $3,258 Freight
Revenue 120 - 120 - - 120 Other Income - 86 86 15 4 105 Gain (Loss)
on Sale of 18.5% of CNX Gas - - - - 327 327 Total Revenue and Other
Income 2,568 165 2,733 617 460 3,810 Cost of Goods Sold 1,613 265
1,878 395 164 2,437 Freight Expense 120 - 120 - - 120 Selling,
General & Admin. 60 1 61 8 12 81 DD&A 194 20 214 35 13 262
Interest Expense - - - - 27 27 Taxes Other Than Income 145 62 207
14 8 229 Total Cost 2,132 348 2,480 452 224 3,156 Earnings (Loss)
Before Income Taxes $436 $(183) $253 $165 $236 $654 Income Tax (64)
Earnings Before Minority Interest 590 Minority Interest (9) Net
Income $581 CONSOL Energy Inc. Financial and Operating Statistics
Quarter Ended Dec 31 2005 2004 AS REPORTED FINANCIALS: Revenue ($
MM) $969.059 $791.434 EBIT ($MM) * $123.039 $43.995 EBITDA ($ MM) *
$190.631 $140.182 Net Income ($ MM) $87.593 $67.668 EPS(diluted)
$0.94 $0.74 Average shares outstanding - Dilutive 93,631,913
91,868,095 CAPEX, excl. acquisitions ($ MM) $236.205 $111.517 COAL
OPERATIONAL: # Mining Complexes (end of period) 22 20 # Complexes
Producing (end of period) 17 16 Sales (MM tons)-Produced only
17.541 18.672 Average sales price ** ($/ton) $36.28 $31.70
Production income ($/ton) $6.33 $5.74 Production (MM tons)-
Produced only 17.657 19.161 Produced Tons Ending inventory (MM
tons)*** 1.650 1.502 * Year to date total may not add due to
rounding ** note: average sales price of tons produced ***note:
includes equity companies First Call Analyst: FCMN Contact:
DATASOURCE: CONSOL Energy Inc. CONTACT: Thomas F. Hoffman of CONSOL
Energy Inc., +1-412-831-4060 Web site: http://www.consolenergy.com/
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