Supplemental Guarantor/Non-Guarantor Financial Information

6 Months Ended

Jun. 30, 2015

Supplemental Guarantor/Non-Guarantor Financial Information

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

20. Supplemental Guarantor/Non-Guarantor Financial Information

In accordance with the indentures governing the senior notes, CPE Inc. and certain of our 100% owned U.S. subsidiaries (the “Guarantor Subsidiaries”) have fully and unconditionally guaranteed the senior notes on a joint and several basis. These guarantees of either series of senior notes are subject to release in the following customary circumstances:

• a sale or other disposition (including by way of consolidation or merger or otherwise) of the Guarantor Subsidiary or the sale or disposition of all or substantially all the assets of the Guarantor Subsidiary (other than to CPE Inc. or a Restricted Subsidiary (as defined in the applicable indenture) of CPE Inc.) otherwise permitted by the applicable indenture,
• a disposition of the majority of the capital stock of a Guarantor Subsidiary to a third person otherwise permitted by the applicable indenture, after which the applicable Guarantor Subsidiary is no longer a Restricted Subsidiary,
• upon a liquidation or dissolution of a Guarantor Subsidiary so long as no default under the applicable indenture occurs as a result thereof,
• the designation in accordance with the applicable indenture of the Guarantor Subsidiary as an Unrestricted Subsidiary or the Guarantor Subsidiary otherwise ceases to be a Restricted Subsidiary of CPE Inc. in accordance with the applicable indenture,
• defeasance or discharge of such series of senior notes; or
• the release, other than the discharge through payment by the Guarantor Subsidiary, of all other guarantees by such Restricted Subsidiary of Debt (as defined in the applicable indenture) of either issuer of the senior notes or (in the case of the indenture for the $200 million senior notes due March 15, 2024) the debt of another Guarantor Subsidiary under the Credit Agreement.

The following historical financial statement information is provided for CPE Inc. and the Guarantor/Non-Guarantor Subsidiaries:

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income
		(in thousands)
			Three Months Ended June 30, 2015
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue			$	2,156	$	―	$	244,148	$	―	$	(2,156)		244,148
Costs and expenses
	Cost of product sold (exclusive of
		depreciation, depletion, amortization,
		and accretion, shown separately)		―		10		222,433		―		―		222,443
	Depreciation and depletion			―		645		18,665		―		―		19,310
	Amortization of port access contract rights			―		―		928		―		―		928
	Accretion			―		―		3,348		―		―		3,348
	Derivative financial instruments			―		―		2,761		―		―		2,761
	Selling, general and administrative expenses			2,165		167		12,335		―		(2,156)		12,511
	Goodwill impairment			―		―		33,355		―		―		33,355
	Other operating costs			―		―		304		―		―		304
Total costs and expenses				2,165		822		294,129		―		(2,156)		294,960
Operating income (loss)				(9)		(822)		(49,981)		―		―		(50,812)
Other income (expense)
	Interest income			―		50		―		―		―		50
	Interest expense			―		(10,967)		(1,568)		(86)		―		(12,621)
	Other, net			―		(44)		244		44		―		244
Total other income (expense)				―		(10,961)		(1,324)		(42)		―		(12,327)
Income (loss) before income tax provision and
	earnings from unconsolidated affiliates			(9)		(11,783)		(51,305)		(42)		―		(63,139)
	Income tax benefit (expense)			1		2,876		6,983		6		―		9,866
	Earnings from unconsolidated affiliates, net
		of tax		―		―		376		―		―		376
	Earnings (losses) from consolidated
		affiliates, net of tax		(52,889)		(43,982)		(36)		―		96,907		―
Net income (loss)				(52,897)		(52,889)		(43,982)		(36)		96,907		(52,897)
Other comprehensive income (loss)
	Postretirement medical plan amortization
		of prior service cost		313		313		313		―		(626)		313
	Income tax on postretirement medical plan			(116)		(116)		(116)		―		232		(116)
Other comprehensive income (loss)				197		197		197		―		(394)		197
Total comprehensive income (loss)			$	(52,700)	$	(52,692)	$	(43,785)	$	(36)	$	96,513	$	(52,700)

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income
		(in thousands)
			Three Months Ended June 30, 2014
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue			$	1,975	$	―	$	315,258	$	5,592	$	(1,975)		320,850
Costs and expenses
	Cost of product sold (exclusive of
		depreciation, depletion, amortization,
		and accretion, shown separately)		―		28		263,358		6,736		―		270,121
	Depreciation and depletion			―		778		28,444		(22)		―		29,200
	Accretion			―		―		3,072		1,016		―		4,088
	Derivative financial instruments			―		―		(2,803)		―		―		(2,803)
	Selling, general and administrative expenses			1,975		162		12,321		―		(1,975)		12,483
	Other operating costs			―		―		333		―		―		333
Total costs and expenses				1,975		968		304,725		7,730		(1,975)		313,422
Operating income (loss)				―		(968)		10,533		(2,138)		―		7,428
Other income (expense)
	Interest income			―		61		―		―		―		61
	Interest expense			―		(10,938)		(2,775)		(100)		―		(13,813)
	Other, net			―		(116)		233		117		―		233
Total other income (expense)				―		(10,993)		(2,542)		17		―		(13,519)
Income (loss) before income tax provision and
	earnings from unconsolidated affiliates			―		(11,961)		7,991		(2,121)		―		(6,091)
	Income tax benefit (expense)			―		3,653		(794)		630		―		3,489
	Earnings from unconsolidated affiliates, net
		of tax		―		―		454		―		―		454
	Earnings (losses) from consolidated
		affiliates, net of tax		(2,148)		6,160		(1,491)		―		(2,521)		―
Net income (loss)				(2,148)		(2,148)		6,160		(1,491)		(2,521)		(2,148)
Other comprehensive income (loss)
	Postretirement medical plan amortization
		of prior service cost		247		247		247		―		(494)		247
	Income tax on postretirement medical plan			(89)		(89)		(89)		―		178		(89)
Other comprehensive income (loss)				158		158		158		―		(316)		158
Total comprehensive income (loss)			$	(1,990)	$	(1,990)	$	6,318	$	(1,491)	$	(2,837)	$	(1,990)

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income
		(in thousands)
			Six Months Ended June 30, 2015
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue			$	4,275	$	―	$	561,701	$	―	$	(4,275)		561,701
Costs and expenses
	Cost of product sold (exclusive of
		depreciation, depletion, amortization and
		accretion, shown separately)		―		18		486,742		―		―		486,760
	Depreciation and depletion			―		1,292		42,554		―		―		43,846
	Amortization of port access contract rights			―		―		1,855		―		―		1,855
	Accretion			―		―		6,890		―		―		6,890
	Derivative mark-to-market gains			―		―		7,546		―		―		7,546
	Selling, general and administrative expenses			4,284		454		23,296		―		(4,275)		23,760
	Goodwill impairment			―		―		33,355		―		―		33,355
	Other operating costs			―		―		517		―		―		517
Total costs and expenses				4,284		1,764		602,755		―		(4,275)		604,529
Operating income (loss)				(9)		(1,764)		(41,054)		―		―		(42,828)
Other income (expense)
	Interest income			―		99		―		―		―		99
	Interest expense			―		(22,070)		(3,049)		(171)		―		(25,289)
	Other, net			―		(131)		(93)		131		―		(93)
Total other (expense) income				―		(22,102)		(3,142)		(40)		―		(25,283)
Income (loss) before income tax provision and
	earnings from unconsolidated affiliates			(9)		(23,866)		(44,196)		(40)		―		(68,111)
	Income tax benefit (expense)			1		3,555		6,584		6		―		10,146
	Earnings from unconsolidated affiliates, net
		of tax		―		(1)		389		―		―		388
	Earnings (losses) from consolidated
		affiliates, net of tax		(57,569)		(37,257)		(34)		―		94,860		―
Net income (loss)				(57,577)		(57,569)		(37,257)		(34)		94,860		(57,577)
Other comprehensive income
	Postretirement medical plan amortization
		of prior service cost		626		626		626		―		(1,252)		626
	Income tax on postretirement medical plan			(232)		(232)		(232)		―		464		(232)
Other comprehensive income				394		394		394		―		(788)		394
Total comprehensive income (loss)			$	(57,183)	$	(57,175)	$	(36,863)	$	(34)	$	94,072	$	(57,183)

Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income
		(in thousands)
			Six Months Ended June 30, 2014
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue			$	3,875	$	―	$	630,359	$	9,557	$	(3,875)		639,916
Costs and expenses
	Cost of product sold (exclusive of
		depreciation, depletion, amortization and
		accretion, shown separately)		―		197		529,954		11,909		―		542,060
	Depreciation and depletion			―		1,535		54,833		(240)		―		56,128
	Accretion			―		―		6,186		2,032		―		8,217
	Derivative mark-to-market gains			―		―		(15,537)		―		―		(15,537)
	Selling, general and administrative expenses			3,875		360		24,564		―		(3,875)		24,924
	Other operating costs			―		45		527		―		―		573
Total costs and expenses				3,875		2,137		600,527		13,701		(3,875)		616,365
Operating income (loss)				―		(2,137)		29,832		(4,144)		―		23,551
Other income (expense)
	Interest income			―		185		―		―		―		185
	Interest expense			―		(46,054)		(5,554)		(199)		―		(51,807)
	Other, net			―		(781)		346		204		―		(231)
Total other (expense) income				―		(46,650)		(5,208)		5		―		(51,853)
Income (loss) before income tax provision and
	earnings from unconsolidated affiliates			―		(48,787)		24,624		(4,139)		―		(28,302)
	Income tax benefit (expense)			―		12,784		(4,085)		1,281		―		9,979
	Earnings from unconsolidated affiliates, net
		of tax		―		(16)		564		―		―		549
	Earnings (losses) from consolidated
		affiliates, net of tax		(17,774)		18,245		(2,858)		―		2,387		―
Net income (loss)				(17,774)		(17,774)		18,245		(2,858)		2,387		(17,774)
Other comprehensive income
	Postretirement medical plan amortization
		of prior service cost		494		494		494		―		(988)		494
	Income tax on postretirement medical plan			(178)		(178)		(178)		―		356		(178)
Other comprehensive income				316		316		316		―		(632)		316
Total comprehensive income (loss)			$	(17,458)	$	(17,458)	$	18,561	$	(2,858)	$	1,755	$	(17,458)

Supplemental Condensed Consolidating Balance Sheet
(in thousands)
			June 30, 2015
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets
	Cash and cash equivalents		$	—	$	94,100	$	1,438	$	—	$	—	$	95,538
	Accounts receivable			—		—		7,152		45,062		—		52,214
	Due from related parties			—		—		530,927		—		(528,454)		2,473
	Inventories, net			—		7,104		71,610		—		—		78,714
	Deferred income taxes			—		—		21,715		—		(45)		21,670
	Derivative financial instruments			—		—		13,086		—		—		13,086
	Other assets			4,618		27		15,977		—		—		20,622
		Total current assets		4,618		101,231		661,905		45,062		(528,499)		284,317
Noncurrent assets
Property, plant and equipment, net				—		5,480		1,538,378		—		—		1,543,858
Port access contract rights, net				—		—		51,925		—		—		51,925
Goodwill				—		—		2,280		—		—		2,280
Deferred income taxes				—		37,482		26,179		6		(413)		63,254
Other assets				1,050,926		1,881,030		35,595		—		(2,919,662)		47,889
		Total assets	$	1,055,544	$	2,025,223	$	2,316,262	$	45,068	$	(3,448,574)	$	1,993,523
LIABILITIES AND MEMBER'S EQUITY
Current liabilities
	Accounts payable		$	3	$	2,156	$	45,440	$	20	$	—	$	47,620
	Royalties and production taxes			—		—		110,830		—		—		110,830
	Accrued expenses			1,692		4,781		31,572		—		—		38,045
	Due to related parties			20,884		468,760		—		38,810		(528,454)		—
	Other liabilities			—		45		1,632		—		(45)		1,632
		Total current liabilities		22,579		475,742		189,474		38,830		(528,499)		198,127
Noncurrent liabilities
Senior notes				—		498,603		—		—		—		498,603
Asset retirement obligations, net of
	current portion			—		—		200,175		—		—		200,175
Deferred income taxes				413		—		—		—		(413)		—
Accumulated postretirement medical benefit
	obligation, net of current portion			—		—		53,691		—		—		53,691
Other liabilities				—		—		10,375		—		—		10,375
	Total liabilities			22,992		974,345		453,715		38,830		(528,912)		960,971
Commitments and Contingencies (Note 13)				—		—		—		—		—
Total equity				1,032,552		1,050,878		1,862,547		6,238		(2,919,662)		1,032,552
	Total liabilities and equity		$	1,055,544	$	2,025,223	$	2,316,262	$	45,068	$	(3,448,574)	$	1,993,523

Supplemental Condensed Consolidating Balance Sheet
(in thousands)
			December 31, 2014
			Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets
	Cash and cash equivalents		$	—	$	167,532	$	1,213	$	—	$	—	$	168,745
	Accounts receivable			—		—		14,161		72,676		—		86,838
	Due from related parties			—		—		601,540		—		(601,313)		227
	Inventories, net			—		6,700		73,103		—		—		79,802
	Deferred income taxes			—		—		21,716		—		(46)		21,670
	Derivative financial instruments			—		—		17,111		—		—		17,111
	Other assets			292		6		9,541		—		—		9,840
		Total current assets		292		174,238		738,385		72,676		(601,359)		384,233
Noncurrent assets
	Property, plant and equipment, net			—		6,167		1,582,971		—		—		1,589,138
	Port access contract rights, net			—		—		53,780		—		—		53,780
	Goodwill			—		—		35,634		—		—		35,634
	Deferred income taxes			—		33,926		22,542		—		—		56,468
	Other assets			1,108,101		1,919,464		26,543		—		(3,013,443)		40,665
		Total assets	$	1,108,393	$	2,133,795	$	2,459,855	$	72,676	$	(3,614,802)	$	2,159,918
LIABILITIES AND MEMBER'S EQUITY
Current liabilities
	Accounts payable		$	—	$	1,287	$	50,679	$	68	$	—	$	52,035
	Royalties and production taxes			—		—		126,212		—		—		126,212
	Accrued expenses			6,194		5,318		40,701		—		—		52,213
	Due to related parties			14,365		520,611		—		66,337		(601,313)		—
	Current portion of federal coal lease
		obligations		—		—		63,970		—		—		63,970
	Other liabilities			—		46		1,632		—		(46)		1,632
		Total current liabilities		20,559		527,262		283,194		66,405		(601,359)		296,062
Noncurrent liabilities
	Senior notes			—		498,480		—		—		—		498,480
	Asset retirement obligations, net of
		current portion		—		—		216,241		—		—		216,241
	Accumulated postretirement medical benefit
		obligation, net of current portion		—		—		50,276		—		—		50,276
	Other liabilities			—		—		11,025		—		—		11,025
		Total liabilities		20,559		1,025,742		560,736		66,405		(601,359)		1,072,084
Commitments and Contingencies (Note 13)				—		—		—		—		—
		Total equity		1,087,834		1,108,053		1,899,119		6,271		(3,013,443)		1,087,834
		Total liabilities and equity	$	1,108,393	$	2,133,795	$	2,459,855	$	72,676	$	(3,614,802)	$	2,159,918

Supplemental Condensed Consolidating Statement of Cash Flows
(in thousands)
		Six Months Ended June 30, 2015
		Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating
	activities	$	—	$	(71,307)	$	86,194	$	—	$	—	$	14,887
Investing activities
	Purchases of property, plant and equipment		—		(2,123)		(12,659)		—		—		(14,782)
	Investment in development projects		—		—		(1,500)		—		—		(1,500)
	Payment of restricted cash		—		—		(6,500)		—		—		(6,500)
	Other		—		—		(184)		—		—		(184)
Net cash provided by (used in) investing
	activities		—		(2,123)		(20,843)		—		—		(22,966)
Financing activities
	Principal payments of federal coal leases		—		—		(63,970)		—		—		(63,970)
	Payment of deferred financing costs		—		(2)		(339)		—		—		(341)
	Other		—		—		(817)		—		—		(817)
Net cash provided by (used in) financing
	activities		—		(2)		(65,126)		—		—		(65,128)
Net increase (decrease) in cash and cash equivalents			—		(73,432)		225		—		—		(73,207)
Cash and cash equivalents at beginning of period			—		167,532		1,213		—		—		168,745
Cash and cash equivalents at the end of period		$	—	$	94,100	$	1,438	$	—	$	—	$	95,538

Supplemental Condensed Consolidating Statement of Cash Flows
(in thousands)
		Six Months Ended June 30, 2014
		Parent Guarantor (CPE Inc.)		Issuing Company (CPE Resources)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating
	activities	$	(594)	$	29,347	$	10,432	$	(3,804)	$	—	$	35,381
Investing activities
	Purchases of property, plant and equipment		—		(1,165)		(5,981)		—		—		(7,146)
	Investments in marketable securities		—		(8,159)		—		—		—		(8,159)
	Maturity and redemption of investments		—		88,845		—		—		—		88,845
	Investment in development projects		—		—		(1,500)		—		—		(1,500)
	Contributions made to subsidiary		—		—		(1,000)		—		1,000		—
	Other		—		—		222		—		—		222
Net cash provided by (used in) investing
	activities		—		79,521		(8,259)		—		1,000		72,262
Financing activities
	Issuance of senior notes		—		200,000		—		—		—		200,000
	Repayment of senior notes		—		(300,000)		—		—		—		(300,000)
	Payment of deferred financing costs		—		(13,598)		—		—		—		(13,598)
	Contributions received from parent		—		—		—		1,000		(1,000)		—
	Other		594		—		(788)		—		—		(194)
Net cash provided by (used in) financing
	activities		594		(113,598)		(788)		1,000		(1,000)		(113,792)
Net increase (decrease) in cash and cash equivalents			—		(4,730)		1,385		(2,804)		—		(6,149)
Cash and cash equivalents at beginning of period			—		226,993		496		4,144		—		231,633
Cash and cash equivalents at the end of period		$	—	$	222,263	$	1,881	$	1,340	$	—	$	225,484