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Foundation Coal Reports Fourth Quarter and 2004 Results.

Article Excerpt
LINTHICUM HEIGHTS, Md. -- Foundation Coal Holdings, Inc. (NYSE:FCL) today reported financial results for its fourth quarter and period ended December 31, 2004.

Highlights

--Earnings for the quarter--the first since the Company's initial public offering on December 9, 2004--were $4.2 million, or $0.15 per diluted share.

--Coal sales revenues increased to $255.6 million for the quarter, from $243.9 million in the same quarter of the previous year for the predecessor company.

--Debt was reduced by $85 million during the quarter.

"The past year was one of outstanding opportunities for Foundation Coal," stated James F. Roberts, Foundation president and chief executive officer. "During the course of 2004, amid perhaps the strongest coal market in the last 30 years, we successfully transitioned the company from a wholly-owned subsidiary to a publicly held company. Throughout the process, our team's attention to maintaining safe, low-cost operations and positioning the company for future growth never wavered."

Roberts added, "We finished 2004 on a positive note, despite longwall moves at both of our Pennsylvania operations in the fourth quarter and challenging geologic and operating conditions at several of our mines earlier in the year. Going forward, strong coal market fundamentals appear to support a pricing environment that bodes well for Foundation. We have successfully locked in revenue growth with our new contracts, while leaving additional upside with our uncommitted volume. We believe we are well positioned for significantly improved performance in 2005 and beyond."

Financial Results

In presenting financial results, information for the five-month operating period ended December 31, 2004 and the fourth quarter of 2004 are referred to as "successor" periods. On July 30, 2004, Foundation acquired the United States coal business of RAG Coal International AG. As a result of the fair valuation of the assets and liabilities acquired as of that date, a process commonly referred to as purchase accounting, the financial results for periods prior to July 30, 2004 are not comparable. Periods prior to July 30, 2004, referred to as "predecessor" periods, are not presented herein because of the lack of comparability.

Foundation Coal is still in the process of finalizing the fair values of assets and liabilities used in purchase accounting. The fair values used in the successor financial statements are based on preliminary valuations from independent valuation specialists and the accumulation of other data relative to the assets and liabilities acquired. The purchase accounting process will be finalized as soon as practical; however, the final allocation of purchase price may result in changes to the preliminary allocation, some of which may have a material effect on the balance sheet and/or results of operations.

For additional operating information presented in the Supplemental Financial Data, such as shipment volumes, sales revenues and certain components of cash flows, the information is comparable between the predecessor and successor periods. Calendar year 2004 information is presented on a pro-forma basis by combining the seven months ended July 30, 2004 of the predecessor with the five month operating period ended December 31, 2004 of the successor. Foundation will post a reconciliation of EBITDA and adjusted EBITDA to accounting principles generally accepted in the United States (GAAP) basis on its website at www.foundationcoal.com.

Fourth quarter 2004 coal sales revenues were $255.6 million on shipments of 16.1 million tons compared with coal sales revenues of $243.9...

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