Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

Segment Information

20. Segment Information

        Historically, we have reported one segment: the production of low-sulfur, thermal coal from surface mines located in the Western region of the U.S. within the PRB, which is sold to electric utilities and industrial customers. Based upon current year and planned future activity along with earnings growth in our Logistics services business, we have presented our reportable segments for all periods as Owned and Operated Mines, Logistics and Related Activities, and Corporate and Other.

        Our Owned and Operated Mines segment is characterized by the predominant focus on thermal coal production where the sale occurs at the mine site and where title and risk of loss pass to the customer at that point. This segment includes our Antelope, Cordero Rojo, and Spring Creek mines. Sales in this segment are primarily to domestic electric utilities; although a portion is made to our Logistics and Related Activities segment. Our mines utilize surface mining extraction processes and are all located in the PRB. The gains and losses resulting from our WTI collar derivative financial instruments are reported within this segment.

        Our Logistics and Related Activities segment is characterized by the services we provide to our international and domestic customers where we deliver coal to them. Services provided typically include: delivered sales contract negotiations; purchase of coal from third parties or from our owned and operated mines; coordination of the transportation and delivery of purchased coal; and sales contract administration activities. Title and risk of loss are retained by the Logistics and Related Activities segment through the transportation and delivery process. Title and risk of loss pass to the customer in accordance with the contract and typically occurs at either a vessel loading terminal, a vessel unloading terminal or an end use facility. Risk associated with rail and terminal take-or-pay agreements is also borne by the Logistics and Related Activities segment. The gains and losses resulting from our international coal forward derivative financial instruments are reported within this segment.

        Our Corporate and Other segment includes results relating to broker activity, our share of the Decker mine operations, and unallocated corporate costs and assets. All corporate costs, except Board of Directors related expenses, are allocated to the segments based upon their relative percentage of certain financial metrics.

        Eliminations represent the purchase and sale of coal between reportable segments and the associated elimination of intercompany profit or loss in inventory. Sales between reportable segments are priced based on prevailing market prices, as determined by us with reference to independent third-party publications.

        Our chief operating decision maker uses Adjusted EBITDA as the primary measure of segment reporting performance. EBITDA represents net income before (1) interest income (expense) net, (2) income tax provision, (3) depreciation and depletion, (4) amortization, and (5) accretion. Adjusted EBITDA represents EBITDA as further adjusted to exclude specifically identified items that management believes do not directly reflect our core operations. For the periods presented herein, the specifically identified items are the income statement amounts for: (1) the updates to the tax agreement liability, including tax impacts of the IPO and Secondary Offering, (2) adjustments for derivative financial instruments, including mark-to-market amounts and cash settlements realized, and (3) a significant broker contract that expired in the first quarter of 2010.

Revenue

        The following table presents revenue for the years ended December 31, (in thousands):

	2012			2011			2010
Owned and Operated Mines	$	1,205,652		$	1,241,567		$	1,154,864
Logistics and Related Activities		338,804			327,417			205,377
Corporate and Other		37,984			50,925			50,326
Eliminations of intersegment sales		(65,668	)		(66,248	)		(39,806	)
Consolidated revenue	$	1,516,772		$	1,553,661		$	1,370,761

        The following table presents revenue from external customers by geographic region for the years ended December 31, (in thousands):

	2012		2011		2010
United States	$	1,211,884	$	1,257,604	$	1,194,800
Asia		296,821		287,236		163,030
Other		8,067		8,821		12,931
Total revenue from external customers	$	1,516,772	$	1,553,661	$	1,370,761

        We attribute revenue to individual countries based on the location of the physical delivery of the coal. All of our revenue for the years ended December 31, 2012, 2011, and 2010 originated in the U.S.

Adjusted EBITDA

        The following table presents Adjusted EBITDA for the years ended December 31, (in thousands):

	2012			2011			2010
Owned and Operated Mines	$	283,280		$	318,751		$	286,342
Logistics and Related Activities		57,080			24,707			18,820
Corporate and Other		36			8,120			16,315
Eliminations		(1,568	)		116			1,256
Consolidated Adjusted EBITDA		338,828			351,695			322,733
Interest expense, net		(35,241	)		(33,274	)		(46,373	)
Depreciation, depletion and accretion		(107,764	)		(99,596	)		(115,719	)
Tax agreement expense		29,000			(19,854	)		(19,669	)
Derivative financial instruments		11,511			2,275			—
Income tax		(62,614	)		(11,449	)		(31,982	)
Expired significant broker contract		—			—			8,207
Net income	$	173,720		$	189,797		$	117,197

Total Assets

        The following table presents total assets at December 31, (in thousands):

	2012		2011
Owned and Operated Mines	$	1,826,165	$	1,484,099
Logistics and Related Activities		46,426		49,636
Corporate and Other		478,536		786,537
Eliminations		196		(953	)
Consolidated assets	$	2,351,323	$	2,319,319

        As of December 31, 2012, 2011, and 2010, all of our long lived assets were located in the U.S.

Capital Expenditures

        The following table presents total capital expenditures for the years ended December 31, (in thousands):

	2012		2011		2010
Owned and Operated Mines	$	395,681	$	202,247	$	87,208
Logistics and Related Activities		7,389		—		—
Corporate and Other		8,365		9,882		4,431
Eliminations		—		—		—
Consolidated	$	411,435	$	212,129	$	91,639