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Segment Information
 9 Months Ended
Sep. 30, 2017
Segment Information  
Segment Information

18. Segment Information

We have two reportable segments; our Owned and Operated Mines segment and our Logistics and Related Activities segment.

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 generally pass to the customer at that point. This segment includes our Antelope Mine, Cordero Rojo Mine, and Spring Creek Mine. Sales in this segment are primarily to domestic electric utilities, although a portion may be made to our Logistics and Related Activities segment. Sales between reportable segments are priced based on prevailing market prices for arm’s length transactions. Our mines utilize surface mining extraction processes and are all located in the PRB. The gains and losses resulting from our domestic coal futures contracts and WTI 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 certain of our domestic customers where we deliver coal to the customer at a terminal or the customer’s plant or other delivery point, remote from our mine site. Services provided include the purchase of coal from third parties or from our Owned and Operated Mines segment, at market prices, as well as the contracting and coordination of the transportation and other handling services from third-party operators, which are typically rail and terminal companies and may include chartering of a vessel. 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 occur at 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 contracts and international coal put options are reported within this segment. Amortization related to the amended port and rail take-or-pay agreements are also included in this segment. Losses associated with our investment in the Gateway Pacific Terminal are included in our Logistics and Related Activities segment.

Our business activities that are not considered operating segments are included in Other although they are not required to be included in this footnote. They are provided for reconciliation purposes and include Selling, general and administrative expenses (“SG&A”) as well as results relating to broker activity.

Eliminations represent the purchase and sale of coal between reportable segments and the associated elimination of intercompany profit or loss in inventory and are provided for reconciliation purposes.

Revenue

The following table presents Revenue (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2017201620172016
Owned and Operated Mines$197,974$212,010$550,228$531,278
Logistics and Related Activities67,6793,375161,90520,594
Other5952,5143,02826,131
Eliminations(17,364)(826)(41,348)(5,493)
Consolidated$248,884$217,073$673,813$572,510

Capital Expenditures

The following table presents purchases of property, plant and equipment, investment in development projects, and capital expenditures included in Property, plant and equipment, net, Other assets, and Accounts payable (in thousands):

Nine Months Ended
September 30,
20172016
Owned and Operated Mines$13,053$31,800
Logistics and Related Activities——
Other1,4201,757
Consolidated$14,473$33,557

Adjusted EBITDA

EBITDA represents net income (loss) before: (1) interest income (expense) net, (2) income tax provision, (3) depreciation and depletion, and (4) amortization. Adjusted EBITDA represents EBITDA as further adjusted for accretion, which represents non-cash increases in asset retirement obligation liabilities resulting from the passage of time, and specifically identified items that management believes do not directly reflect our core operations. For the periods presented herein, the specifically identified items are: (1) adjustments to exclude non-cash impairment charges, (2) adjustments for derivative financial instruments, excluding fair value mark-to-market gains or losses and including cash amounts received or paid, (3) adjustments to exclude debt restructuring costs, and (4) non-cash throughput amortization expense and contract termination payments made to amend the BNSF and Westshore agreements. We enter into certain derivative financial instruments such as put options that require the payment of premiums at contract inception.  The reduction in the premium value over time is reflected in the mark-to-market gains or losses.  Our calculation of Adjusted EBITDA does not include premiums paid for derivative financial instruments; either at contract inception, as these payments pertain to future settlement periods, or in the period of contract settlement, as the payment occurred in a preceding period. In prior years the amortization of port and rail contract termination payments were included as part of EBITDA and Adjusted EBITDA because the cash payments approximated the amount of amortization being taken during the year. During 2017, management determined that the non-cash portion of amortization arising from payments made in prior years as well as the amortization of contract termination payments should be adjusted out of EBITDA because the ongoing cash payments are now significantly smaller than the overall amortization of these payments and no longer reflect the transactional results.

The following table reconciles consolidated Net income (loss) to consolidated Operating income (loss) and segment Operating income (loss) to segment Adjusted EBITDA (in thousands):

Adjusted EBITDA by Segment
Three Months EndedNine Months Ended
September 30,September 30,
2017201620172016
Net income (loss) $2,577$(1,584)$(24,478)$(2,670)
Interest income(147)(46)(304)(116)
Interest expense9,57313,03232,35135,371
Other, net98165546760
Income tax expense (benefit)(115)(647)36(3,226)
(Income) loss from unconsolidated affiliates, net of tax(138)(59)(771)1,018
Consolidated operating income (loss)$11,848$10,861$7,380$31,137
Owned and Operated Mines
Operating income (loss)$27,096$33,055$54,334$76,775
Depreciation and depletion18,54423,17456,05722,104
Accretion1,7148595,0795,177
Derivative financial instruments:
Exclusion of fair value mark-to-market (gains) losses(838)1,0723,102(5,203)
Inclusion of cash amounts received (paid)(821)(2,337)(1,968)(8,539)
Total derivative financial instruments(1,659)(1,265)1,134(13,742)
Impairments—312—2,451
Other(98)(164)(548)(761)
Adjusted EBITDA$45,597$55,971$116,056$92,004
Logistics and Related Activities
Operating income (loss)$(1,919)$(7,800)$(12,774)$(23,861)
Derivative financial instruments:
Exclusion of fair value mark-to-market (gains) losses—(4)—(54)
Inclusion of cash amounts received (paid)—1,781—5,344
Total derivative financial instruments—1,777—5,290
Non-cash throughput amortization expense and
contract termination payments5,069—14,989—
Other—(1)—(1,754)
Adjusted EBITDA$3,150$(6,024)$2,215$(20,325)
Other
Operating income (loss)$(13,160)$(14,355)$(34,030)$(21,626)
Depreciation and depletion245285626948
Accretion151206453464
Impairment———2,048
Debt restructuring costs—4,499234,499
Other13860771737
Adjusted EBITDA(1) (2)$(12,626)$(9,305)$(32,157)$(12,930)
Eliminations
Operating income (loss)$(168)$(38)$(150)$(151)
Adjusted EBITDA$(168)$(38)$(150)$(151)

  • Includes $48 and $1,596 of sales contract buyouts for the three months ended September 30, 2017 and 2016, respectively.
  • Includes $144 and $24,349 of sales contract buyouts for the nine months ended September 30, 2017 and 2016, respectively.