Alpha Natural Resources Case Study

732 Words2 Pages

Alpha Natural Resources’ total revenue earned during 2013 of $4.9 billion declined approximately 29% when compared to revenue earned during 2012. This is owed primarily to decreased coal revenues of approximately $1.8 billion. This decline in coal revenue is largely owed to lower sales volumes. Additionally during 2013, the company realized a 26.8% decrease in Freight and Handling revenues and Other Revenues declined a staggering 30.2%, resulting in the overall decrease of revenue. The decline in Freight and Handling revenues is directly attributed to the decrease in export shipments of coal in addition to declining freight rates. The decrease in Other Revenues is a result of significant changes in fair value adjustments for derivatives used …show more content…

This decrease significantly impacted the gross profit of the operation. Resulting in a staggering 64% decline in gross profit …show more content…

According to the 2013 Annual Report, “The decrease in cost of coal sales was owed primarily to decreased supplies and maintenance expenses, including diesel fuel and explosives, decreased merger-related expenses, decreased purchased coal expenses and decreased labor and benefit expenses primarily related to production curtailments and mine idlings implemented during 2012 and the first half of 2013, decreased credit adjustments related to changes in estimates for asset retirement obligations, and other cost control measures, and decreased sales-related and other variable costs associated with decreased metallurgical and steam coal revenues and decreased steam coal production, partially offset by increased expenses for regulatory matters” (p. 66).

On January 31st, 2011 Alpha Natural Resources acquired Massey Energy. Amortization expense of acquired intangibles increased approximately $75.4 million during 2013 when compared to the previous year. This increase in expense for amortization of acquired intangibles is largely owed to the decreased amortization of below-market contracts absorbed through the Massey acquisition. This is owed primarily to the completion of shipments under a large number of the contracts Alpha

Open Document