Risk factors for coal companies

The annual reports for U.S. coal companies listed on the stock exchange list "risk factors" that they consider could adversely impact on the future financial performance of the company.

Risk factors for Massey Energy
In its 2008 annual report, Massey Energy lists its possible risk factors as :


 * "We could be negatively impacted by the competitiveness of the markets in which we compete and declines in the market demand for coal";
 * "Demand for our coal depends on its price and quality and the cost of transporting it to our customers";
 * "A significant decline in coal prices in general could adversely affect our operating results and cash flows";
 * "We depend on continued demand from our customers";
 * "There may be adverse changes in price, volume or terms of our existing coal supply agreements";
 * "Our financial condition may be adversely affected if we are required by some of our customers to provide performance assurances for certain below-market sales contracts";
 * "The level of our indebtedness could adversely affect our ability to grow and compete and prevent us from fulfilling our obligations under our contracts and agreements";
 * "The covenants in our credit facility and the indentures governing debt instruments impose restrictions that may limit our operating and financial flexibility";
 * "We are subject to being adversely affected by the potential inability to renew or obtain surety bonds";
 * "We depend on our ability to continue acquiring and developing economically recoverable coal reserves";
 * "We face numerous uncertainties in estimating economically recoverable coal reserves, and inaccuracies in estimates could result in lower than expected revenues, higher than expected costs and decreased profitability";
 * "Defects in title or loss of any leasehold interests in our properties could limit our ability to mine our properties or result in significant unanticipated costs";
 * "If the coal industry experiences overcapacity in the future, our profitability could be impaired";
 * "An inability of brokerage sources or contract miners to fulfill the delivery terms of their contracts with us could reduce our profitability";
 * "Decreased availability or increased costs of key equipment, supplies or commodities such as diesel fuel, steel, explosives, magnetite and tires could decrease our profitability";
 * "Transportation disruptions could impair our ability to sell coal";
 * "Severe weather may affect our ability to mine and deliver coal";
 * "Federal, state and local laws and government regulations applicable to operations increase costs and may make our coal less competitive than other coal producers";
 * "Concerns about the environmental impacts of coal combustion, including perceived impacts on global climate change, are resulting in increased regulation of coal combustion in many jurisdictions, and interest in further regulation, which could significantly affect demand for our products";
 * "Our operations may adversely impact the environment which could result in material liabilities to us";
 * "The Mine Safety and Health Administration (“MSHA”) or other federal or state regulatory agencies may order certain of our mines to be temporarily or permanently closed, which could adversely affect our ability to meet our customers’ demands";
 * "We must obtain governmental permits and approvals for mining operations, which can be a costly and time-consuming process, can result in restrictions on our operations, and is subject to litigation that may delay or prevent us from obtaining necessary permits";
 * "The loss of key personnel or the failure to attract qualified personnel could affect our ability to operate the Company effectively";
 * "Shortages of skilled labor in the Central Appalachian coal industry may pose a risk in achieving high levels of productivity at competitive costs";
 * "Union represented labor creates an increased risk of work stoppages and higher labor costs";
 * "Inflationary pressures on supplies and labor may adversely affect our profit margins";
 * "We are subject to various legal proceedings, which may have a material effect on our business";
 * "We have significant reclamation and mine closure obligations. If the assumptions underlying our accruals are materially inaccurate, we could be required to expend greater amounts than anticipated";
 * "Our future expenditures for post-retirement benefit and pension obligations could be materially higher than we have predicted if our underlying assumptions are incorrect";
 * "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";
 * "Provisions in our restated certificate of incorporation and restated bylaws, the agreements governing our indebtedness and Delaware law may discourage a takeover attempt even if doing so might be beneficial to our shareholders";
 * "We may not realize all or any of the anticipated benefits from acquisitions we undertake, as acquisitions entail a number of inherent risks";
 * "Foreign currency fluctuations could adversely affect the competitiveness of our coal abroad";
 * "Terrorist attacks and threats, escalation of military activity in response to such attacks or acts of war may negatively affect our cash flows, results of operations or financial condition";
 * "Coal mining is subject to inherent risks, some for which we maintain third-party insurance and some for which we selfinsure"; and
 * "An accounting change for cash settled convertible debt instruments applicable to our 3.25% Notes will likely cause our reported interest expense to increase".

Risk factors for Foundation Coal
In its 2008 annual report Foundation Coal lists its risk factors as being :
 * "A substantial or extended decline in coal prices or demand could reduce our revenues and the value of our coal reserves";
 * "Changes in market conditions, factors influencing the demand for coal, and increased production costs could adversely affect 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 supply contracts 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 Secured Credit Facility 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 Secured Credit Facility 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 extend 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"; and
 * "The current financial crisis and deteriorating economic conditions may have material adverse impacts on our business and financial condition that we currently cannot predict".

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