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Alpha Appalachia Holdings, Inc. – ‘10-QT’ for 12/31/01

On: Thursday, 2/14/02 · For: 12/31/01 · Accession #: 916641-2-285 · File #: 1-07775

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/14/02  Alpha Appalachia Holdings, Inc.   10-QT      12/31/01    1:34K                                    Donnelly Financial/FA

Quarterly-Transition Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-QT       Form 10-Q Dated 12/31/01                              13     70K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Condensed Consolidated Financial Statements Exhibits and Reports on Form 8-K Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Other Information Quantitative and Qualitative Discussions About Market Risk
1	1st Page - Filing Submission
3	Item 1:. Condensed Consolidated Financial Statements
9	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
11	Item 3:. Quantitative and Qualitative Discussions About Market Risk
12	Item 1. Legal Proceedings
"	Item 5. Other Information
"	Item 6. Exhibits and Reports on Form 8-K

10-QT 1st Page of 13 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-Q

(MARK ONE)

[  ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934                                                           

OR

[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934                                                             

For the transition period from  November 1, 2001  to   December 31, 2001
                                ----------------       -----------------

Commission File Number: 1-7775

 MASSEY ENERGY COMPANY
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

     Delaware                                             95-0740960
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer   
incorporation or organization)                            Identification Number)

4 North 4th Street, Richmond, Virginia                  23219     
--------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip Code)   

(804) 788-1800
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required 
to file such reports), and (2) has been subject to such filing requirements for 
the past 90 days. Yes [X] No[ ]                                                 

As of January 31, 2002 there were 74,798,561 shares of common stock, $0.625 par 
value, outstanding.                                                             

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 MASSEY ENERGY COMPANY

 FORM 10-Q

For the Transition Period from November 1, 2001 to December 31, 2001

TABLE OF CONTENTS                                                           PAGE
--------------------------------------------------------------------------------

Part I:  Financial Information                                               3  

Item 1.  Condensed Consolidated Financial Statements                         3  

Item 2.  Management's Discussion and Analysis of Financial Condition and        
         Results of Operations                                             9

Item 3.  Quantitative and Qualitative Discussions About Market Risk         11  

Part II: Other Information                                                  12  

Item 1.  Legal Proceedings                                                  12  

Item 5.  Other Information                                                  12  

Item 6.  Exhibits and Reports on Form 8-K                                   12  

Signatures                                                                  13  

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                                                        [Enlarge/Download Table]
PART I: FINANCIAL INFORMATION                                                                   

ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                             

                                      MASSEY ENERGY COMPANY                                     

                         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                        

                                            UNAUDITED                                           


                                                                     Two Months Ended           
                                                                       December 31,             
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS                            2001               2000       
------------------------------------------------------------------------------------------------
                                                                                                
Net sales                                                        $  204,753          $  168,809 
Other revenue                                                         6,669               3,512 
                                                             ---------------    ----------------
Total revenue                                                       211,422             172,321 
Costs and expenses                                                                              
        Cost of sales                                               201,329             147,459 
        Depreciation, depletion and amortization                     31,192              28,831 
        Selling, general and administrative                          10,553               5,888 
                                                             ---------------    ----------------
Total costs and expenses                                            243,074             182,178 

Loss before interest and taxes                                      (31,652)             (9,857)

Interest income                                                         987               2,123 
Interest expense                                                      5,302               3,719 
                                                             ---------------    ----------------

Loss before taxes                                                   (35,967)            (11,453)

Income tax benefit                                                  (13,576)             (4,467)
                                                             ---------------    ----------------

Net loss                                                         $  (22,391)         $   (6,986)
                                                             ===============    ================

Loss per share (Note 7)                                                                         
        Basic                                                    $    (0.30)         $    (0.09)
                                                             ===============    ================
        Diluted                                                  $    (0.30)         $    (0.09)
                                                             ===============    ================

Shares used to calculate loss per share (Note 7)                                                
        Basic                                                        74,131              74,098 
                                                             ===============    ================
        Diluted                                                      74,131              74,098 
                                                             ===============    ================

Dividends declared per share                                              -          $     0.04 
                                                             ===============    ================

                    See Notes to Condensed Consolidated Financial Statements.                   

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                                                 MASSEY ENERGY COMPANY                                                

                                         CONDENSED CONSOLIDATED BALANCE SHEETS                                        
                                        December 31, 2001 and October 31, 2001                                        

                                                       UNAUDITED                                                      

                                                                            DECEMBER 31,                   OCTOBER 31,
$ IN THOUSANDS                                                                  2001                         2001 *   
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
ASSETS                                                                                                                

Current Assets                                                                                                        
   Cash and cash equivalents                                               $       5,544                $       5,664 
   Trade and other accounts receivable                                           184,347                      198,885 
   Inventories                                                                   155,793                      141,483 
   Deferred taxes                                                                 13,572                       13,572 
   Income taxes receivable                                                         1,880                        1,880 
   Prepaid expenses and other                                                     97,199                       93,620 
                                                                         -----------------            ----------------
        Total current assets                                                     458,335                      455,104 

Net Property, Plant and Equipment                                              1,619,698                    1,613,133 
Other Noncurrent                                                                                                      
Assets                                                                                                                
    Pension assets                                                                81,354                       80,400 
    Other                                                                        108,744                      120,029 
                                                                         -----------------            ----------------
        Total other noncurrent assets                                            190,098                      200,429 
                                                                         -----------------            ----------------

        Total assets                                                       $   2,268,131                $   2,268,666 
                                                                         ================             ================

* Amounts at October 31, 2001 have been derived from audited financial statements.                                    

                            (Continued On Next Page)                                                                  

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                              MASSEY ENERGY COMPANY                                                                   

                      CONDENSED CONSOLIDATED BALANCE SHEETS                                                           
                     December 31, 2001 and October 31, 2001                                                           

                                    UNAUDITED                                                                         

                                                                              DECEMBER 31,                 OCTOBER 31,
$ IN THOUSANDS                                                                   2001                         2001 *  
----------------------------------------------------------------------------------------------------------------------
                                                                                                                      
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                  

Current Liabilities                                                                                                   
    Accounts payable, principally trade and bank overdrafts                 $     186,810               $     185,903 
    Short-term debt                                                               263,101                     248,231 
    Payroll and employee benefits                                                  31,212                      37,878 
    Other current liabilities                                                      75,526                      68,159 
                                                                         -----------------            ----------------
        Total current liabilities                                                 556,649                     540,171 

Long-term debt                                                                    300,000                     300,000 
Noncurrent liabilities                                                                                                
     Deferred taxes                                                               239,874                     254,115 
     Other noncurrent liabilities                                                 323,914                     308,030 
                                                                         -----------------            ----------------
        Total noncurrent liabilities                                              563,788                     562,145 

Shareholders' Equity                                                                                                  
     Capital Stock                                                                                                    
        Preferred - authorized 20,000,000 shares without par value;                                                   
        none issued                                                                     -                           - 
        Common - authorized 150,000,000 shares of $0.625 par value;                                                   
        issued and outstanding - 74,773,920 and 74,543,670 shares at                                                  
        December 31 and October 31, 2001, respectively                             46,734                      46,590 
     Additional capital                                                            18,559                      15,541 
     Retained earnings                                                            788,534                     810,925 
     Unamortized executive stock plan expense                                      (6,133)                     (6,706)
                                                                         -----------------            ----------------
        Total shareholders' equity                                                847,694                     866,350 
                                                                         -----------------            ----------------

        Total liabilities and shareholders' equity                          $   2,268,131               $   2,268,666 
                                                                         =================            ================

* Amounts at October 31, 2001 have been derived from audited financial statements.                                    

                               See Notes to Condensed Consolidated Financial Statements.                              

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                                                      MASSEY ENERGY COMPANY                                                      

                                          CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                         
                                           Two Months Ended December 31, 2001 and 2000                                           

                                                            UNAUDITED                                                            


$ IN THOUSANDS                                                                                   2001                    2000    
-------------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES                                                                                             
    Net loss                                                                                  $  (22,391)            $   (6,986) 
    Adjustments to reconcile net loss to cash utilized by operating activities:                                                  
       Depreciation, depletion and amortization                                                   31,192                 28,831  
       Deferred taxes                                                                            (13,601)                 1,644  
       Loss on disposal of assets                                                                    139                  1,565  
       Changes in operating assets and liabilities                                                24,513                (71,736) 
                                                                                      -------------------      ----------------- 
Cash provided (utilized) by operating activities                                                  19,852                (46,682) 
                                                                                      -------------------      ----------------- 

CASH FLOWS FROM INVESTING ACTIVITIES                                                                                             
    Capital expenditures                                                                         (37,698)               (23,386) 
                                                                                      -------------------      ----------------- 
Cash utilized by investing activities                                                            (37,698)               (23,386) 
                                                                                      -------------------      ----------------- 

CASH FLOWS FROM FINANCING ACTIVITIES                                                                                             
    Increase (decrease) in short-term debt, net                                                   14,870                 (3,568) 
    Decrease in amount due from Fluor Corporation                                                      -                 67,554  
    Equity contributions from Fluor Corporation                                                        -                  2,476  
    Stock options exercised                                                                        2,856                      -  
    Other, net                                                                                         -                  1,058  
                                                                                      -------------------      ----------------- 
Cash provided by financing activities                                                             17,726                 67,520  
                                                                                      -------------------      ----------------- 

Decrease in cash and cash equivalents                                                               (120)                (2,548) 
Cash and cash equivalents at beginning of period                                                   5,664                  6,929  
                                                                                      -------------------      ----------------- 

Cash and cash equivalents at end of period                                                    $    5,544             $    4,381  
                                                                                      ===================      ================= 

                                    See Notes to Condensed Consolidated Financial Statements.                                    
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                

(1)      Effective January 1, 2002, Massey Energy Company ("Massey" or "the     
         Company") changed its fiscal year end from October 31 to December 31 to
         enhance the financial community's ability to analyze and compare Massey
      to others within the coal industry. As a requirement of this change,
      the Company is reporting results for November and December 2001 as a
separate transition ("stub") period, with the results for the 
  corresponding period of 2000 presented for comparative purposes.

The condensed consolidated financial statements do not include
         footnotes and certain financial information normally presented annually
     under accounting principles generally accepted in the United States
    and, therefore, should be read in conjunction with Massey's Annual
 Report on Form 10-K for the fiscal year ended October 31, 2001.
     Accounting measurements at interim dates inherently involve greater
       reliance on estimates than at year-end. The results of operations for
       the two months ended December 31, 2001 are not necessarily indicative
of results that can be expected for the full year.            

     The condensed consolidated financial statements included herein are
        unaudited; however, they contain all adjustments (consisting of normal
         recurring accruals) which, in the opinion of the Company, are necessary
       to present fairly its consolidated financial position at December 31,
       2001, its consolidated results of operations for the two months ended
         December 31, 2001 and 2000, and its consolidated cash flows for the two
months ended December 31, 2001 and 2000.                      

      Certain 2000 amounts have been reclassified to conform with the 2001
presentation.                                                 

(2)      On November 30, 2000, the Company completed a reverse spin-off (the    
    "Spin-Off"), which divided it into the spun-off corporation, "new"
      Fluor Corporation ("New Fluor"), and Fluor Corporation, subsequently
renamed Massey Energy Company, which retained the Company's   
      coal-related business. Except as the context otherwise requires, the
     terms "Massey" or the "Company" as used herein shall include Massey
        Energy Company, its wholly owned subsidiary, A.T. Massey Coal Company,
  Inc. ("A.T. Massey"), and A.T. Massey's subsidiaries. For a more
   complete discussion of the transaction see Note 9 of the Notes to
         Consolidated Financial Statements within Massey's Annual Report on Form
   10-K for the fiscal year ended October 31, 2001 as filed with the
Securities and Exchange Commission.                           

(3)      Effective November 1, 2000, the Company adopted Statement of Accounting
       Standards No. 133, "Accounting for Derivative Instruments and Hedging
      Activities" ("SFAS 133") as amended by SFAS No. 138, "Accounting for
        Certain Derivative Instruments and Hedging Activities". The Statements
      require that an entity recognize all derivatives as either assets or
      liabilities in the statement of financial position and measure those
       instruments at fair value. The adoption of these accounting standards
   and subsequent implementation guidance did not have a significant
       impact on the Company's financial position, results of operations, or
liquidity.                                                    

(4)      In August 2001, the Financial Accounting Standards Board ("FASB")      
         issued Statement of Accounting Standards No. 143, "Accounting for Asset
  Retirement Obligations" ("SFAS 143"). The standard requires that
        retirement obligations be recorded as a liability based on the present
      value of the estimated cash flows. This SFAS is effective for fiscal
      years beginning after June 15, 2002, and transition is by cumulative
         catch-up adjustment. The adoption of this accounting standard will take
       place during the Company's fiscal year 2003. The Company is currently
    evaluating the impact that the standard will have on its financial
statements.                                                   

(5)      Inventories are comprised of:                                          
                                        December 31,     October 31,
$ in thousands                           2001             2001
      --------------------------------------------------------------------
   Coal                                 $   132,267      $   117,915
   Other                                     23,526           23,568
                                        -----------      -----------
                                        $   155,793      $   141,483
                                        ===========      ===========

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 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)                         

(6)      Net Property, Plant and Equipment is comprised of:                                           
                                                                       December 31,      October 31,  
         $ in thousands                                                    2001              2001     
         ---------------------------------------------------------------------------------------------
                                                                                                      
         Property, Plant and Equipment, at cost                        $  2,751,026     $  2,715,074  
         Accumulated depreciation, depletion and amortization            (1,131,328)      (1,101,941) 
                                                                       ------------     ------------  
                                                                       $  1,619,698     $  1,613,133  
                                                                       ============     ============  

(7)      The number of shares used to calculate basic loss per share for the two
  months ended December 31, 2001 and 2000 is based on the weighted
   average outstanding shares of Massey Energy during the respective
        periods. The number of shares used to calculate diluted loss per share
         is based on the number of shares used to calculate basic loss per share
 plus the dilutive effect of stock options and other stock-based
      instruments held by Massey employees each period. In accordance with
    accounting principles generally accepted in the United States, the
        effect of dilutive securities was excluded from the calculation of the
         diluted loss per common share in the two months ended December 31, 2001
and 2000, as such inclusion would result in antidilution.     

(8)      In December 2001, a substantial customer, Enron Corporation, filed for 
      bankruptcy protection. As a result, the Company incurred a charge of
         $6.9 million in December 2001 related to its exposure to this customer.

(9)      The West Virginia Workers Compensation Division filed suits in April   
        1998 against several coal companies, including several subsidiaries of
      Massey, for delinquent workers' compensation premiums from the 1980s
       and early 1990s owed by former contractors and licensees of such coal
 companies. In late 1999, the West Virginia Workers Compensation
Division agreed to dismiss these lawsuits. In early 2001, the 
         Affiliated Construction Trades Council filed a complaint in the Circuit
    Court of McDowell County, West Virginia seeking to reinstate these
      lawsuits. By opinion dated October 23, 2001, the court held that the
     cases could be reinstated. In December 2001, in lieu of potentially
       reinstating the lawsuits, the State of West Virginia and several coal
       operators, including Massey, began discussions regarding a settlement
    of potential claims. In January 2002, Massey agreed to settle such
       claims for $6.9 million in exchange for a release of all such claims,
   which is included in cost of sales for the two month period ended
December 31, 2001.                                            

(10)     On January 2, 2002, the West Virginia Division of Environmental        
       Protection ("WVDEP") entered an order finding a pattern of violations
    and suspending two refuse area permits of Massey subsidiary, Green
      Valley Coal Company, for three days. Green Valley obtained a stay of
    enforcement of the order pending appeal and filed an appeal of the
order.                                                        

  On January 14, 2002, WVDEP entered an order finding a pattern of
       violations and suspending operations on the refuse impoundment permit
      of Massey subsidiary, Marfork Coal Company, Inc., for fourteen days.
        Marfork obtained a stay of enforcement of the order pending appeal and
filed an appeal of the order.                                 

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS                                                 

   The following discussion and analysis is provided to increase understanding
of, and should be read in conjunction with, the Condensed Consolidated Financial
Statements and accompanying notes and the Company's Annual Report on Form 10-K  
for the fiscal year ended October 31, 2001.                                     

FORWARD-LOOKING INFORMATION                                                     
---------------------------                                                     

From time to time, the Company makes certain comments and disclosures in
reports and statements, including this report or statements made by its officers
or directors which may be forward-looking in nature. Examples include statements
related to Company growth, the adequacy of funds to service debt and the        
Company's opinions about trends and factors which may impact future operating   
results. These forward-looking statements could also involve, among other       
things, statements regarding the Company's intent, belief or expectation with   
respect to (i) the Company's results of operations and financial condition, (ii)
the consummation of acquisition, disposition or financing transactions and the  
effect thereof on the Company's business, and (iii) the Company's plans and     
objectives for future operations and expansion or consolidation.                

 Any forward-looking statements are subject to the risks and uncertainties
that could cause actual results of operations, financial condition, cost        
reductions, acquisitions, dispositions, financing transactions, operations,     
expansion, consolidation and other events to differ materially from those       
expressed or implied in such forward-looking statements. Any forward-looking    
statements are also subject to a number of assumptions regarding, among other   
things, future economic, competitive and market conditions generally. These     
assumptions would be based on facts and conditions as they exist at the time    
such statements are made as well as predictions as to future facts and          
conditions, the accurate prediction of which may be difficult and involve the   
assessment of events beyond the Company's control. As a result, the reader is   
cautioned not to rely on these forward-looking statements.                      

The Company wishes to caution readers that forward-looking statements,  
including disclosures, which use words such as the Company "believes,"          
"anticipates," "expects," "estimates" and similar statements, are subject to    
certain risks and uncertainties, which could cause actual results of operations 
to differ materially from expectations. Any forward-looking statements should be
considered in context with the various disclosures made by the Company about its
businesses, including without limitation the risk factors more specifically     
described in Item 1. Business, under the heading "Business Risks", in the       
Company's Annual Report on Form 10-K for its fiscal year ended October 31, 2001.
Such filings are available publicly and upon request from Massey's Investor     
Relations Department: (866) 814-6512. The Company disclaims any intent or       
obligation to update its forward-looking statements.                            

RESULTS OF OPERATIONS                                                           
---------------------                                                           

  For the two months ended December 31, 2001 ("stub period 2001"), net sales
increased 21.3 percent to $204.8 million in 2001 compared with $168.8 million   
for the same two month period ended December 31, 2000. Two factors that impacted
net sales during the stub period 2001 were:                                     

     o    The volume of tons sold increased 9.0 percent from 6.3 million tons to
        7.0 million tons consisting of an increase of utility and industrial
  tons sold of 27 and 8 percent, respectively, and a decrease of
metallurgical tons sold of 20 percent.                      

   o    The average per ton sales price for coal increased 11.3 percent from
$26.39 per ton to $29.36 per ton.                           

Realized prices for Massey tonnage sold in the stub period 2001 reflects
some of the improvement seen in the market during fiscal year 2001, as spot     
market prices of Central Appalachian coal increased to 20-year highs. However,  
during the stub period 2001 the economic environment continued to soften, steel 
demand remained weak and unusually warm winter weather prevailed in the Eastern 
United States. As a result, utilities have been able to build stockpiles of coal
to comfortable levels and the flow of new contract proposals slowed             
significantly.                                                                  

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 Other revenue, which consists of royalties, rentals, miscellaneous income
and gains on the sale of non-strategic assets, increased to $6.7 million for the
stub period 2001 compared with $3.5 million for the same two month period ended 
December 31, 2000. The increase was primarily due to an increase in net margin  
on brokered coal sales and increased fees related to the operations of a synfuel
facility.                                                                       

  Cost of sales increased 36.5 percent to $201.3 million for the stub period
2001 from $147.5 million in the same period in 2000. This was primarily due to  
the 9.0 percent increase in tons sold, as well as an increase of 35.1 percent in
the number of members employed by the Company. Cost of sales on a per ton of    
coal sold basis increased by 25.2 percent in the stub period 2001 compared with 
the same two month period ended December 31, 2000. This increase was due to     
higher labor costs resulting from an extremely tight labor market in Central    
Appalachia and decreases in productivity related to the training of new miners  
consistent with the trend experienced in fiscal year 2001. Additionally, the    
increase reflects several startup issues related to two new longwalls, the      
opening of a new surface mine, and the completion of upgrades to two preparation
plants. Cost of sales for the stub period 2001 also included a $6.9 million     
pretax charge related to the settlement with the State of West Virginia         
regarding Worker's Compensation liabilities incurred by independent contractors.
Cost of sales for the stub period 2001 also included a charge of $5.0 million   
pretax for the buyout of a coal supply contract and to increase reserves related
to a wrongful employee discharge suit in which the Company received an adverse  
jury verdict.                                                                   

  Depreciation, depletion and amortization increased by 8.2 percent to $31.2
million in the stub period 2001 compared to $28.8 million in the same two month 
period ended December 31, 2000. The increase of $2.4 million was primarily due  
to capital expenditures made in recent years in the Company's effort to increase
production.                                                                     

    Selling, general and administrative expenses were $10.6 million for the stub
period 2001 compared to $5.9 million for 2000. The increase was primarily       
attributable to a charge related to the Company's exposure to Enron.            

Earnings (loss) before interest, taxes, depreciation, depletion and     
amortization ("EBITDA"), was ($0.5) million for the stub period 2001 compared to
$18.9 million for the same two month period ended December 31, 2000.            

   Interest income decreased to $1.0 million for the stub period 2001 compared
with $2.1 million for the same two month period ended December 31, 2000. This   
decrease was primarily due to the elimination of the Company's loans with Fluor 
Corporation in connection with the Spin-Off transaction on November 30, 2000.   

    Interest expense increased to $5.3 million for the stub period 2001 compared
with $3.7 million for the same two month period ended December 31, 2000. The    
increase was primarily due to the addition of the 6.95 percent Senior Notes and 
commercial paper borrowings subsequent to the Spin-Off.                         

   Income tax benefit was $13.6 million for the stub period 2001 compared with
$4.5 million for the same two month period ended December 31, 2000. This        
primarily reflects the increased loss before interest and taxes in the stub     
period 2001 compared to the same two month period ended December 31, 2000.      

LIQUIDITY AND CAPITAL RESOURCES                                                 
-------------------------------                                                 

   At December 31, 2001, the Company's available liquidity was $125.5 million,
including cash and cash equivalents of $5.5 million and $120.0 million from the 
Company's commercial paper program. Massey had $262.1 million of consolidated   
commercial paper (outstanding commercial paper of $279.6 million net of discount
offset by $17.5 million of Massey commercial paper purchased by various Massey  
subsidiaries) included in short-term debt as of December 31, 2001. The total    
debt-to-book capitalization ratio was 39.9 percent at December 31, 2001. In     
order to participate in the commercial paper market, the Company must maintain  
an investment grade rating as determined by both Moody's and Standard & Poor's, 
national rating agencies. Failure to maintain this rating would most likely     
result in increased interest expense, as the Company would be required to draw  
on its available liquidity backstop. On the date of the Spin-Off, Massey entered
into $150 million 364-day and $250 million 3-year revolving credit facilities,  
which have been guaranteed by A. T. Massey, that serve to provide liquidity     
backstop to Massey's commercial paper program and are also available to meet the
Company's ongoing liquidity needs. The $150 million 364-day facility has been   
renewed through November 26, 2002. Borrowings under these facilities bear       
interest based on (i) the London Interbank Offer Rate (LIBOR) plus a margin,    
which is based on the Company's credit rating as determined by Moody's and      
Standard & Poor's, (ii) the Base Rate (as defined in the facility agreements),  
and (iii) the Competitive Bid rate (as defined in the facility agreements).     
There were no borrowings outstanding under the credit facilities at December 31,
2001.                                                                           

 The revolving credit facilities contain financial covenants requiring the
Company to maintain various financial ratios. Failure by the Company to comply  
with these covenants could result in an event of default, which if not cured or 
waived could have a material adverse effect on the Company. The financial       
covenants consist of a maximum leverage ratio, a minimum interest coverage      
ratio, and a minimum net worth test. The leverage ratio requires that the       

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Company not permit the ratio of total indebtedness at the end of any quarter to 
adjusted EBITDA for the four quarters then ended to exceed a specific amount.   
The interest coverage ratio requires that the Company not permit the ratio of   
the Company's adjusted EBITDA to interest expense for the four quarters then    
ended to be less than a specified amount. The net worth test requires that the  
Company not permit its net worth to be less than a specified amount. The Company
was not in compliance with the covenant related to the leverage ratio at        
December 31, 2001, however, the participant banks have granted a temporary      
waiver of this financial covenant. The waiver, originally expiring on February  
22, 2002, has been extended to March 29, 2002. The Company is seeking to obtain 
an amendment to the covenant level prior to the expiration of the waiver and    
expects approval by the participant banks. If the Company is unable to obtain an
amendment to the covenant level, it would most likely result in the Company     
seeking alternate sources of short-term financing, or issuing longer term debt. 
The Company has available a $500 million debt shelf registration originally     
filed with the Securities and Exchange Commission by Fluor Corporation in March 
1999.                                                                           

 Cash flow provided by (used in) operating activities was $19.9 million in
the stub period 2001 and ($46.7) million for the same two month period ended    
December 31, 2000. Cash provided by operating activities reflects net earnings  
adjusted for non-cash charges and changes in working capital requirements.      

Net cash utilized by investing activities was $37.7 million for the stub
period 2001, and $23.4 million for the same two month period ended December 31, 
2000. The cash used in investing activities reflects capital expenditures in the
amount of $37.7 million and $23.4 million for the stub period 2001 and 2000,    
respectively. These capital expenditures are for replacement of mining          
equipment, the expansion of mining capacity and projects to improve the         
efficiency of mining operations. In addition to the cash spent on capital       
expenditures, during the stub period 2001, the Company leased, through operating
leases, $17.5 million of longwall and surface mining equipment compared to $10.6
million for the same two month period ended December 31, 2000.                  

  Financing activities primarily reflect changes in short term financing for
the stub period 2001, and amounts due from Fluor Corporation and additional     
capital investments from Fluor prior to the Spin-Off for the same two month     
period ended December 31, 2000.                                                 

INFLATION                                                                       
---------                                                                       

    Inflation in the United States has been relatively low in recent years and
did not have a material impact on Massey's results of operations for the periods
presented.                                                                      

NEW ACCOUNTING STANDARDS                                                        
-------------------------                                                       

On August 15, 2001, the Financial Accounting Standards Board ("FASB") 
issued Statement of Financial Accounting Standards No. 143, "Accounting for     
Asset Retirement Obligations". The standard will require that retirement        
obligations be recorded as a liability based on the present value of the        
estimated cash flows. This SFAS is effective for fiscal years beginning after   
June 15, 2002 and transition is by cumulative catch-up adjustment. The Company  
is currently evaluating the impact that the standard will have on its financial 
statements.                                                                     

OUTLOOK                                                                         
-------                                                                         

 Mild winter weather, softening steel demand, and the general economic
recession have led Massey to reduce its estimate of 2002 and 2003 Central       
Appalachian coal demand. The Company expects to sell approximately 50 million   
tons in 2002, a 14% increase over fiscal 2001, with approximately 90% of        
expected tonnage having been sold for 2002, with contract prices at             
significantly higher rates than in fiscal 2001. The Company expects breakeven   
financial results during the first calendar quarter of 2002.                    

Item 3:  QUANTITATIVE AND QUALITATIVE DISCUSSIONS ABOUT MARKET RISK             

   Massey's interest expense is sensitive to changes in the general level of
interest rates in the United States. At December 31, 2001, Massey had           
outstanding $300 million aggregate principal amount of debt under fixed-rate    
instruments; however, the Company's primary exposure to market risk for changes 

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in interest rates relates to its commercial paper program. At December 31, 2001,
Massey had $280.1 million of aggregate principal amount of commercial paper     
outstanding ($279.6 million net of discount). At December 31, 2001 Massey's     
commercial paper bore interest at an average rate of 2.96 percent. Based on the 
commercial paper balance outstanding at December 31, 2001, a 100 basis point    
increase in the average issuance rate for Massey's commercial paper would       
increase Massey's annual interest expense by approximately $2.8 million.        

   Almost all of Massey's transactions are denominated in U.S. dollars, and,
as a result, it does not have material exposure to currency exchange-rate risks.

     Massey has not engaged in any interest rate, foreign currency exchange rate
or commodity price-hedging transactions.                                        

PART II: OTHER INFORMATION                                                      

Item 1. Legal Proceedings                                                       

     There have been no material developments in legal proceedings affecting the
    Company, as previously described in Part I, Item 3 in the Company's Annual
 Report on Form 10-K for the fiscal year ended October 31, 2001, as they
relate to the stub period ended December 31, 2001.                    

Item 5.  Other Information                                                      

a)  Effective January 22, 2002, the Directors of the Company amended    
       Sections 3.02 of the Company's Bylaws to increase the size of the Board
     of Directors from seven to eight directors. The Company's Amended and
   Restated Bylaws are enclosed as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 2001. 

  b)  On January 22, 2002, the Board of Directors unanimously elected Dan R.
Moore as a Class II Director.                                   

Item 6. Exhibits and Reports on Form 8-K.                                       

(a) None                                                                

(b) Reports on Form 8-K.                                                

None                                                            

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

                                 MASSEY ENERGY COMPANY
                                 -------------------------
                                  (Registrant)

Date:  February 14, 2002                  /s/ J. M. Jarosinski                  
                                        ------------------------------------
                             J. M. Jarosinski,
                                    Vice President - Finance
                                       and Chief Financial Officer

                     /s/ E. B. Tolbert
                                        ------------------------------------
                                     E. B. Tolbert, Controller

--------------------------------------------------------------------------------

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-QT’ Filing	Date	First	Last	Other Filings

	11/26/02	10
	6/15/02	7	11
	3/29/02	11
	2/22/02	11
Filed on:	2/14/02	13		SC 13G/A
	1/31/02	1
	1/22/02	12
	1/14/02	8
	1/2/02	8
	1/1/02	7
For Period End:	12/31/01	1	12	10-Q/A, 11-K
	11/1/01	1	2
	10/31/01	4	12	10-K, 10-K/A
	10/23/01	8
	8/15/01	11
	12/31/00	6	11	11-K
	11/30/00	7	10	3, 8-K, DEF 14A
	11/1/00	7		DEF 14A
				List all Filings

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Filing Submission 0000916641-02-000285 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Alpha Appalachia Holdings, Inc. – ‘10-QT’ for 12/31/01

On: Thursday, 2/14/02 · For: 12/31/01 · Accession #: 916641-2-285 · File #: 1-07775

Quarterly-Transition Report — Form 10-QFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly-Transition Report — Form 10-Q
Filing Table of Contents