Supplemental Guarantor/Non-Guarantor Financial Information (CPE Resources only)

9 Months Ended

Sep. 30, 2011

Supplemental Guarantor/Non-Guarantor Financial Information (CPE Resources only)

Supplemental Guarantor/Non-Guarantor Financial Information (CPE Resources only)

13.  Supplemental Guarantor/Non-Guarantor Financial Information (CPE Resources only)

In accordance with the indentures governing the 8.25% Senior Notes due 2017 (“2017 notes”) and the 8.50% Senior Notes due 2019 (“2019 notes”), collectively the senior notes, certain wholly-owned U.S. subsidiaries of CPE Resources (the “Guarantor Subsidiaries”) have fully and unconditionally guaranteed these senior notes on a joint and several basis.  Separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented because management believes that such information is not material to the senior note holders.  The following historical financial statement information is provided for the Guarantor/Non-Guarantor Subsidiaries:

Unaudited Supplemental Condensed Consolidating Statement of Operations

(in thousands)

	Three Months Ended September 30, 2011
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	39		$	400,891		$	6,020		$	—		$	406,950
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	243			299,081			7,209			—			306,533
Depreciation and depletion	494			23,372			423			—			24,289
Amortization and accretion	—			2,018			966			—			2,984
Selling, general and administrative expenses	11,310			1,661			—			—			12,971
Total costs and expenses	12,047			326,132			8,598			—			346,777
Operating income	(12,008		)	74,759			(2,578		)	—			60,173
Other income (expense)
Interest income and other, net	142			(102		)	—			—			40
Interest expense	(6,586		)	(247		)	(15		)	—			(6,848		)
Total other expense	(6,444		)	(349		)	(15		)	—			(6,808		)
Income from continuing operations before income tax provision and earnings (losses) from affiliates	(18,452		)	74,410			(2,593		)	—			53,365
Income tax provision	5,372			(45,442		)	(5,206		)	—			(45,276		)
Earnings from unconsolidated affiliates, net of tax	—			530			—			—			530
Earnings (losses) from consolidated affiliates, net of tax	21,699			(7,799		)	—			(13,900		)	—
Net income	$	8,619		$	21,699		$	(7,799	)	$	(13,900	)	$	8,619

Unaudited Supplemental Condensed Consolidating Statement of Operations

(in thousands)

	Three Months Ended September 30, 2010
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	366,574		$	5,790		$	—		$	372,364
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	—			257,081			5,085			—			262,166
Depreciation and depletion	546			25,038			413			—			25,997
Amortization and accretion	—			2,422			915			—			3,337
Selling, general and administrative expenses	8,202			8,105			207			—			16,514
Total costs and expenses	8,748			292,646			6,620			—			308,014
Operating income	(8,748		)	73,928			(830		)	—			64,350
Other income (expense)
Interest income and other, net	196			70			2			—			268
Interest expense	(11,080		)	(310		)	(14		)	—			(11,404		)
Total other expense	(10,884		)	(240		)	(12		)	—			(11,136		)
Income from continuing operations before income tax provision and earnings (losses) from affiliates	(19,632		)	73,688			(842		)	—			53,214
Income tax provision	—			1,266			—			—			1,266
Earnings from unconsolidated affiliates, net of tax	18			820			—			—			838
Earnings (losses) from consolidated affiliates, net of tax	74,932			(842		)	—			(74,090		)	—
Net income	$	55,318		$	74,932		$	(842	)	$	(74,090	)	$	55,318

Unaudited Supplemental Condensed Consolidating Statement of Operations

(in thousands)

	Nine Months Ended September 30, 2011
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	39		$	1,134,454		$	16,681		$	—		$	1,151,174
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	255			836,873			18,423			—			855,551
Depreciation and depletion	1,458			56,038			1,041			—			58,537
Amortization and accretion	—			6,520			2,900			—			9,420
Selling, general and administrative expenses	34,099			4,806			—			—			38,905
Total costs and expenses	35,812			904,237			22,364			—			962,413
Operating income	(35,773		)	230,217			(5,683		)	—			188,761
Other income (expense)
Interest income and other, net	457			(33		)	1			—			425
Interest expense	(26,751		)	(725		)	(44		)	—			(27,520		)
Total other expense	(26,294		)	(758		)	(43		)	—			(27,095		)
Income from continuing operations before income tax provision and earnings (losses) from affiliates	(62,067		)	229,459			(5,726		)	—			161,666
Income tax provision	19,363			(29,717		)	3,881			—			(6,473		)
Earnings from unconsolidated affiliates, net of tax	18			2,124			—			—			2,142
Earnings (losses) from consolidated affiliates, net of tax	200,021			(1,845		)	—			(198,176		)	—
Net income	$	157,335		$	200,021		$	(1,845	)	$	(198,176	)	$	157,335

Unaudited Supplemental Condensed Consolidating Statement of Operations

(in thousands)

	Nine Months Ended September 30, 2010
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	78		$	1,009,051		$	15,831		$	—		$	1,024,960
Costs and expenses
Cost of product sold (exclusive of depreciation, depletion, amortization and accretion, shown separately)	(11		)	704,547			14,471			—			719,007
Depreciation and depletion	1,581			72,451			1,180			—			75,212
Amortization and accretion	—			10,317			2,783			—			13,100
Selling, general and administrative expenses	21,154			25,444			561			—			47,159
Total costs and expenses	22,724			812,759			18,995			—			854,478
Operating income	(22,646		)	196,292			(3,164		)	—			170,482
Other income (expense)
Interest income and other, net	435			95			4			—			534
Interest expense	(35,216		)	(927		)	(43		)	—			(36,186		)
Total other expense	(34,781		)	(832		)	(39		)	—			(35,652		)
Income from continuing operations before income tax provision and earnings (losses) from affiliates	(57,427		)	195,460			(3,203		)	—			134,830
Income tax provision	—			1,266			—			—			1,266
Earnings from unconsolidated affiliates, net of tax	28			3,042			—			—			3,070
Earnings (losses) from consolidated affiliates, net of tax	196,565			(3,203		)	—			(193,362		)	—
Net income	$	139,166		$	196,565		$	(3,203	)	$	(193,362	)	$	139,166

Unaudited Supplemental Condensed Consolidating Balance Sheet

(in thousands)

	September 30, 2011
	Parent Company (CPE Resources)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	425,237	$	3	$	12,320		$	—		$	437,560
Restricted cash	74,321		—		—			—			74,321
Accounts receivable, net	—		93,246		4,216			—			97,462
Inventories, net	5,570		62,860		4,261			—			72,691
Due from related parties	—		236,714		2,413			(239,127		)	—
Deferred income taxes and other assets	40		37,543		136			(894		)	36,825
Total current assets	505,168		430,366		23,346			(240,021		)	718,859
Property, plant and equipment, net	5,724		1,313,621		2,752			—			1,322,097
Goodwill	—		35,634		—			—			35,634
Deferred income taxes	20,705		49,393		11,064			—			81,162
Investments and other assets	1,141,871		—		—			(1,107,426		)	34,445
Total assets	$	1,673,468	$	1,829,014	$	37,162		$	(1,347,447	)	$	2,192,197
LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable and accrued expenses	$	17,452	$	100,773	$	8,436		$	—		$	126,661
Royalties and production taxes	—		142,262		2,092			—			144,354
Due to related parties	252,844		—		—			(239,127		)	13,717
Current portion of federal coal lease obligations	—		105,926		—			—			105,926
Other liabilities	938		3,837		966			(894		)	4,847
Total current liabilities	271,234		352,798		11,494			(240,021		)	395,505
Senior notes	595,977		—		—			—			595,977
Federal coal lease obligations, net of current portion	—		186,119		—			—			186,119
Asset retirement obligations, net of current portion	—		109,345		61,839			—			171,184
Other liabilities	133		62,166		4,129			(29,140		)	37,288
Total liabilities	867,344		710,428		77,462			(269,161		)	1,386,073
Commitments and Contingencies (Note 9)
Total member’s equity	806,124		1,118,586		(40,300		)	(1,078,286		)	806,124
Total liabilities and member’s equity	$	1,673,468	$	1,829,014	$	37,162		$	(1,347,447	)	$	2,192,197

Unaudited Supplemental Condensed Consolidating Balance Sheet

(in thousands)

	December 31, 2010
	Parent Company (CPE Resources)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	322,010	$	4	$	18,086		$	—		$	340,100
Restricted cash	182,072		—		—			—			182,072
Accounts receivable, net	—		63,913		1,260			—			65,173
Inventories, net	5,069		55,907		3,994			—			64,970
Due from related parties	—		172,985		2,413			(175,398		)	—
Deferred income taxes and other assets	—		26,641		64			(893		)	25,812
Total current assets	509,151		319,450		25,817			(176,291		)	678,127
Property, plant and equipment, net	5,165		999,464		3,708			—			1,008,337
Goodwill	—		35,634		—			—			35,634
Deferred income taxes	1,389		68,180		9,395			—			78,964
Investments and other assets	911,304		—		—			(872,999		)	38,305
Total assets	$	1,427,009	$	1,422,728	$	38,920		$	(1,049,290	)	$	1,839,367
LIABILITIES AND MEMBER’S EQUITY
Current liabilities
Accounts payable and accrued expenses	$	4,685	$	117,803	$	6,131		$	—		$	128,619
Royalties and production taxes	—		124,623		2,415			—			127,038
Due to related parties	186,262		—		—			(175,398		)	10,864
Deferred income taxes	893		—		—			(893		)	—
Current portion of federal coal lease obligations	—		54,630		—			—			54,630
Current portion of long-term debt	52		3,862		966			—			4,880
Total current liabilities	191,892		300,918		9,512			(176,291		)	326,031
Senior notes	595,684		—		—			—			595,684
Federal coal lease obligations, net of current portion	—		63,659		—			—			63,659
Asset retirement obligations, net of current portion	—		119,998		62,172			—			182,170
Other liabilities	174		61,644		3,478			(32,732		)	32,564
Total liabilities	787,750		546,219		75,162			(209,023		)	1,200,108
Commitments and Contingencies (Note 9)
Total member’s equity	639,259		876,509		(36,242		)	(840,267		)	639,259
Total liabilities and member’s equity	$	1,427,009	$	1,422,728	$	38,920		$	(1,049,290	)	$	1,839,367

Unaudited Supplemental Condensed Consolidating Statement of Cash Flows

(in thousands)

	Nine Months Ended September 30, 2011
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
Net cash provided by (used in) operating activities	$	5,947		$	212,225		$	(5,534	)	$	212,638
Investing activities
Purchases of property, plant and equipment	(8,166		)	(92,424		)	(232		)	(100,822		)
Initial payment on federal coal leases	—			(69,407		)	—			(69,407		)
Return of restricted cash	107,887			—			—			107,887
Other	—			545			—			545
Net cash provided by (used in) investing activities	99,721			(161,286		)	(232		)	(61,797		)
Financing activities
Principal payments on federal coal leases	—			(50,902		)	—			(50,902		)
Distributions to parent	(162		)	—			—			(162		)
Other	(2,279		)	(38		)	—			(2,317		)
Net cash used in financing activities	(2,441		)	(50,940		)	—			(53,381		)
Net increase (decrease) in cash and cash equivalents	103,227			(1		)	(5,766		)	97,460
Cash and cash equivalents at end of period	322,010			4			18,086			340,100
Cash and cash equivalents at beginning of period	$	425,237		$	3		$	12,320		$	437,560

Unaudited Supplemental Condensed Consolidating Statement of Cash Flows

(in thousands)

	Nine Months Ended September 30, 2010
	Parent Company (CPE Resources)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidated
Net cash provided by (used in) operating activities	$	165,859		$	99,946		$	(3,587	)	$	262,218
Investing activities
Purchases of property, plant and equipment	(1,909		)	(54,071		)	(149		)	(56,129		)
Proceeds from sale of assets	—			1,401			68			1,469
Return of restricted cash	80,180			—			—			80,180
Restricted cash deposit	(218,397		)	—			—			(218,397		)
Net cash provided by (used in) investing activities	(140,126		)	(52,670		)	(81		)	(192,877		)
Financing activities
Principal payments on federal coal leases	—			(47,276		)	—			(47,276		)
Distributions to Members	(2,669		)	—			—			(2,669		)
Net cash used in financing activities	(2,669		)	(47,276		)	—			(49,945		)
Net decrease in cash and cash equivalents	23,064			—			(3,668		)	19,396
Cash and cash equivalents at end of period	246,470			—			21,846			268,316
Cash and cash equivalents at beginning of period	$	269,534		$	—		$	18,178		$	287,712