1310023--3/17/2006--Foundation_Coal

related topics

{gas, price, oil}

{debt, indebtedness, cash}

{cost, contract, operation}

{customer, product, revenue}

{cost, regulation, environmental}

{cost, operation, labor}

{operation, natural, condition}

{loss, insurance, financial}

{personnel, key, retain}

{provision, law, control}

{acquisition, growth, future}

Risks Relating to Our Business A substantial or extended decline in coal prices could reduce our revenues and the value of our coal reserves. Any adverse change in coal consumption patterns by North American electric power generators or steel producers could result in weaker demand and possibly lower prices for our production, which would reduce our revenues. Our profitability may decline due to unanticipated mine operating conditions and other factors that are not within our control. MSHA and state regulators may order certain of our mines to be temporarily closed or operations therein modified, which would adversely affect our ability to meet our contracts or projected costs. Our profitability may be adversely affected by the status of our long-term coal supply contracts, and changes in purchasing patterns in the coal industry may make it difficult for us to extend existing contracts or enter into long-term supply contracts, which could adversely affect the capability and profitability of our operations. Certain provisions in our long-term supply contracts may provide limited protection during adverse economic conditions or may result in economic penalties upon the failure to meet specifications. The loss of, or significant reduction in, purchases by our largest customers could adversely affect our revenues. Disruption in supplies of coal produced by third parties and contractors could temporarily impair our ability to fill our customers orders or increase our costs. Competition within the coal industry may adversely affect our ability to sell coal. The government extensively regulates our mining operations, which imposes significant actual and potential costs on us, and future regulations could increase those costs or limit our ability to produce coal. Our operations may substantially impact the environment or cause exposure to hazardous substances, and our properties may have significant environmental contamination, any of which could result in material liabilities to us. Extensive environmental regulations affect our customers and could reduce the demand for coal as a fuel source and cause our sales to decline. Fluctuations in transportation costs and the availability or reliability of transportation could reduce revenues by causing us to reduce our production or impairing our ability to supply coal to our customers. Because our profitability is substantially dependent on the availability of an adequate supply of coal reserves that can be mined at competitive costs, the unavailability of these types of reserves would cause our profitability to decline. We face numerous uncertainties in estimating our economically recoverable coal reserves, and inaccuracies in our estimates could result in lower than expected revenues, higher than expected costs or decreased profitability. Defects in title or loss of any leasehold interests in our properties could limit our ability to mine these properties or result in significant unanticipated costs. Acquisitions that we may undertake would involve a number of inherent risks, any of which could cause us not to realize the benefits anticipated to result. Expenditures for benefits for non-active employees could be materially higher than we have anticipated, which could increase our costs and adversely affect our financial results. The inability of the sellers of companies we have acquired to fulfill their indemnification obligations to us under our acquisition agreements could increase our liabilities and adversely affect our results of operations and financial position. Our leverage could harm our business by limiting our available cash and our access to additional capital, and could force us to sell material assets or operations to attempt to meet our debt service obligations. If our business does not generate sufficient cash from operations, we may not be able to repay our indebtedness. Despite our current leverage, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our indebtedness. The covenants in our Senior Credit Facilities and our indenture impose restrictions that may limit our operating and financial flexibility. Failure to maintain required surety bonds could affect our ability to secure reclamation and coal lease obligations, which could adversely affect our ability to mine or lease the coal. Failure to maintain capacity for required letters of credit could limit our available borrowing capacity under our Senior Credit Facilities and could negatively impact our ability to obtain additional financing to fund future working capital, capital expenditures or other general corporate requirements. Due to our participation in multi-employer pension plans, we may have exposure under those plans that extends beyond what our obligation would be with respect to our employees. Our pension plans are currently underfunded and we may have to make significant cash payments to the plans, reducing the cash available for our business. Our financial condition could be negatively affected if we fail to maintain satisfactory labor relations. A shortage of skilled labor in the mining industry could pose a risk to achieving improved labor productivity and competitive costs, which could adversely affect our profitability. Our ability to operate our company effectively could be impaired if we lose key personnel. Mining in Central Appalachia and Northern Appalachia is more complex and involves more regulatory constraints than mining in the other areas, which could affect the mining operations and cost structures of these areas. Our ability to collect payments from our customers could be impaired if their creditworthiness deteriorates. Terrorist attacks and threats, escalation of military activity in response to such attacks or acts of war may negatively affect our business, financial condition and results of operations. Provisions in our certificate of incorporation and bylaws may discourage a takeover attempt even if doing so might be beneficial to our shareholders.

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1310023--3/17/2006--Foundation_Coal_CORP