Massey Energy Reports Record Second Quarter Operating Results, Offset By Litigation...

Massey Energy Reports Record Second Quarter Operating Results, Offset By
Litigation Charge
Second Quarter Highlights

RICHMOND, Va., July 31 /PRNewswire-FirstCall/ -- Massey Energy Company
(NYSE: MEE) today reported a year over year increase of 38 percent in second
quarter produced coal revenue and an 8 percent increase in produced coal tons
sold, highlighting the strength of the Company's expanding operations in
Central Appalachia. Produced coal revenue for the quarter was a record $710.3
million compared to $516.2 million in the second quarter of 2007. Produced
tons sold reached 10.8 million in the quarter compared to 10.0 million in the
second quarter last year. In addition to the higher volume, the increased
produced coal revenue was driven by an 83 percent increase in export shipments
and a 36 percent increase in metallurgical coal sales. This combination
resulted in average produced coal revenue per ton of $65.78, up 28 percent
compared to the second quarter of last year.
(http://www.newscom.com/cgi-bin/prnh/20071031/MASSEYENERGYLOGO )
During the quarter the Company booked a pre-tax charge of $245.3 million
related to the ongoing litigation with Wheeling-Pittsburgh Steel Company ("WP
litigation charge" - see note 2). This charge offset the strong operating
results of the quarter. Including the WP litigation charge, Massey reported a
net loss of $93.3 million or $1.16 per share for the second quarter of 2008.
EBITDA was a negative $46.3 million for the second quarter and positive $83.0
million for the first six months of 2008.
Excluding the WP litigation charge, Massey posted record quarterly
results. For the second quarter, net income excluding the WP litigation
charge was $92.2 million or $1.15 per share compared to net income of $34.9
million or $0.43 per share in the second quarter of 2007. EBITDA excluding
the WP litigation charge in the second quarter of 2008 was $199.0 million, an
increase of 65 percent over the EBITDA of $120.3 million achieved in the
second quarter of 2007 (for a reconciliation of non-GAAP measures see the
notes to the accompanying financial tables).
Commenting on the Company's second quarter operations, Massey's Chairman
and Chief Executive Officer Don Blankenship said, "Our members and our
resource groups performed well in the second quarter and we were pleased with
our operating results. Produced coal revenue and average revenue per ton
reached new records and, excluding the Wheeling Pitt charge, we also set new
records for operating cash margin per ton, EBITDA and earnings per share. We
continued to make good progress with our expansion plans during the quarter
and most of our projects are on or ahead of schedule."
For the first half of 2008, Massey generated produced coal revenue of
$1.25 billion and recorded a net loss of $51.4 million or $0.64 per share.
Net income excluding the WP litigation charge was $134.1 million or $1.68 per
share. This compared to $1.04 billion in produced coal revenue and $67.5
million in net income or $0.84 per share in the first half of 2007. EBITDA
excluding the WP litigation charge was $328.3 million in the first half of
2008 compared to EBITDA of $238.0 million in the first six months of 2007.
Massey's second quarter operating cash margin per ton of $15.94
represented an increase of 83 percent compared to the operating cash margin
per ton of $8.72 reported in the second quarter of 2007. The increased cash
margin was driven by a 28 percent increase in averaged realized prices on coal
shipped in the second quarter of $65.78 per ton compared to $51.40 per ton in
the second quarter 2007. Average realized prices were driven by a 36 percent
increase in metallurgical coal shipments and increased average coal prices per
ton in all coal categories. Average cash costs per ton for the second quarter
were $49.84 compared to $42.68 in the second quarter of 2007 due to increases
in sales related costs on the higher realized prices; higher labor, diesel
fuel, stock-based compensation costs also contributed to the higher cash cost
per ton result.
Other income totaled $26.9 million in the quarter and included a pre-tax
gain of $15.3 million from a coal reserves exchange transaction completed
during the quarter. This compared to other income of $32.8 million in the
second quarter of 2007, which included a $10.3 million pre-tax gain on a coal
reserve trade.

2nd Quarter Comparative Statistics

2nd Qtr. 1st Qtr. 2nd Qtr.
2008 2008 2007

Produced tons sold (millions) 10.8 9.6 10.0
Produced coal revenue ($ millions) $710.3 $543.2 $516.2
Produced coal revenue per ton $65.78 $56.36 $51.40
Average cash cost per ton $49.84 $45.62 $42.68
EBITDA ($ millions) ($46.3) $129.2 $120.3
EBITDA (excluding WP
litigation charge) $199.0 $129.2 $120.3
($ millions)

First Half Comparative Statistics

2008 2007

Produced tons sold (millions) 20.4 20.0
Produced coal revenue ($ millions) $1,253.5 $1,035.9
Produced coal revenue per ton $61.34 $51.83
Average cash cost per ton $47.85 $42.52
EBITDA ($ millions) $83.0 $238.1
EBITDA (excluding WP litigation charge) $328.3 $238.1
($ millions)

Expansion Update - New Preparation Plants Announced
Significant second quarter achievements toward Massey's previously
announced expansion plans included the completion of the Norfolk Southern rail
siding and 130 car unit train loadout, the start up of two new mines and the
completion of nine miles of raw coal transportation beltline at the Mammoth
Energy resource group. The existing portion of the beltline is now operating
and the project will be completed when four more miles of beltline are added
during the third quarter. Additionally, the previously announced new slope to
the Pond Creek seam was completed by Massey's Process Energy subsidiary and
the new M-3 Energy mine in the Williamson seam was opened at the Sidney Coal
resource group. Production at both of these new operations is expected to
normalize during the third quarter.
Noteworthy advances in the expansion of surface mining operations included
the relocation and return to production of a large electric shovel at the
Republic Energy resource group, and the addition of new excavators at the
Republic Energy and Black Castle resource groups.
Massey also announced plans to build 3 to 6 new preparation plants and
shipping loadouts over the next two years. One of these preparation plants,
already under construction at the Company's Inman Coal resource group in Boone
County, WV, is expected to be completed this year. Construction is scheduled
to begin soon on another new preparation plant at the Coalgood Energy resource
group in Harlan County, KY. The locations of the remaining new plants were
not disclosed as plans have not yet been finalized. Massey expects the new
plants to improve its already superior competitive position by providing a
number of advantages including processing cost reductions, increased
processing capacity, reduced freight costs for customers and the elimination
of mine to plant trucking expenses.
Coal Market Overview
Pricing for Massey's core products was very strong in the second quarter
and remains so to date.
-- Eastern U.S. steam coal prices increased dramatically during the second
quarter, driven by continued strong demand from the export market. Pricing
for prompt delivery NYMEX spec coal increased approximately 85 percent from
March 31 to June 30, ending the month and quarter at nearly $140.00 per ton.
-- Prompt delivery coal prices for 12,500 btu steam coal continue to be
$150.00 to $160.00 per ton in July and we believe the underlying market
fundamentals remain unchanged. Global supply of coal remains tight and demand
for coal is increasing.
-- Bench mark prices for metallurgical coal have been established at
$300.00 per metric tonne, FOB terminal. Massey has been able to sign supply
agreements at this price.
"During the quarter we made extensive visits to some of the world's most
rapidly developing countries," Blankenship added. "Based on discussions with
customers and potential customers, and visits to several power and coke
construction projects, I came away convinced that the world's need for coal
will continue to grow at a rapid rate. The high quality and diversity of the
coal we produce as well as our leading market position in Central Appalachia
will enable us to compete effectively to serve these growing export energy
markets. We are very pleased with our market and production positions and our
opportunities to grow our business with both new and existing customers. We
are particularly pleased to have reached agreements on several multi-year
deals to supply coal to Asian customers."
Massey believes the demand for Central Appalachia coal is likely to exceed
supply for the foreseeable future due to the following factors:
-- In spite of all-time high prices, Central Appalachian coal production
declined by an estimated 0.7 percent in the first half of 2008 after being
down 4.5 percent in 2007 according to the U.S. Energy Information
Administration.
-- Coal burn at utilities in the southeastern United States was down 1.7
percent through the first 6 months of the year, however, their receipts of
coal were down 10.7 percent. As a result, coal stock piles in terms of days
of burn are down 28.3 percent compared to the same period last year.
-- Steam coal export volumes and prices have continued to strengthen, as
rapidly growing Asian energy demands have impacted the supply and demand
balance for steam coal in the Atlantic Basin. Export prices from the U.S. are
also being supported by high ocean freight rates, continuing supply
limitations from non-U.S. Atlantic Basin suppliers, and a weak U.S. dollar.
-- The quality of Central Appalachia coal allows it to enjoy significant
market diversity and its proximity to sea ports makes it a highly desirable
source of energy to fill the growing demand in the Atlantic Basin.
-- Steam coal export volumes by U.S producers have continued to be strong.
Total steam coal exports are up 55.6 percent through the first 5 months of the
year. The greatest increase in steam coal exports has come from the Southeast
Atlantic ports consisting almost exclusively of Central Appalachia coal.
-- Continued economic expansion in the world's largest developing
countries is driving higher demand for steel, significantly increasing the
global demand for metallurgical coal.
-- Total U.S. exports of metallurgical coal have increased 55.5 percent
year-to-date with over half of the increase being shipped through Southeast
Atlantic ports.
-- Vertical integration by steel producers has and will continue to drive
consolidation within global metallurgical coal production and could result in
additional supply constraints.
Guidance and Commitments
The Company continues to project 2008 produced coal shipments will be
between 41.5 and 43.0 million tons, with average produced coal realization
between $65.00 and $66.00 per ton. Excluding the WP litigation charge,
average cash cost per ton for the full year 2008 is expected to be between
$47.00 and $50.00. Other income is expected to be between $20 and $100
million.
For 2009 Massey expects produced coal shipments to be in the range of 46.0
to 48.0 million tons, 13.0 to 14.0 million tons of which will be metallurgical
coal. For the total tons shipped, the average price is expected to be in the
range of $84.00 to $92.00 per ton. The Company currently has approximately
6 million unsold or unpriced tons for 2009, substantially all of which are of
metallurgical quality. Cash costs for 2009 are expected to be in the range of
$52.00 to $60.00 per ton.
Based on current coal market conditions and the Company's expansion plans,
Massey expects to ship approximately 50.0 million tons in 2010, 15 million
tons of which are expected to be metallurgical coal. The Company has
approximately 30 million unsold or unpriced tons for 2010, of which
approximately 12 million tons are of metallurgical quality. While it is
difficult to accurately project pricing 2 years in the future, the Company
expects strong pricing for its remaining unsold 2010 tons. Current
expectations are that 2010 average price realization will be in the range of
$115.00 to $132.00 per ton.
Changes to Company issued guidance are summarized below:

2008 2009 2010
(In millions Previous Current Previous Current Previous Current
except per Estimate Estimate Estimate Estimate Estimate Estimate
ton amounts)

Shipped
Tons 41.5 to 43 41.5 to 43 46 to 48 46 to 48 50 50

Average $61 to $65 to $65 to $84 to $75 to $115 to
$63 $66 $74 $92 $87 $132
Price/Ton

Cash Cost/ $45 to $47 to -- $52 to -- --
Ton $47.50 $50 $60

CAPEX
(approx) $550 $650 -- -- -- --

Other Income $20 to $20 to -- -- -- --
$100 $100

Liquidity and Capital Resources
Massey ended the month of June 2008 with available liquidity of $445.6
million compared to $489.6 million at March 31, 2008. The Company's available
liquidity at June 30, 2008 included $93.7 million available on its asset-based
revolving credit facility and $351.9 million in cash. Total debt at June 30,
2008 was $1,104.0 million compared to $1,104.6 million at December 31, 2007.
Massey's total debt-to-book capitalization ratio increased to 59.5 percent
at June 30, 2008 compared to 58.5 percent at December 31, 2007. After
deducting available cash of $351.9 million and restricted cash of $96.0
million, which supports letters of credit and other obligations, net debt
totaled $656.1 million. Total net debt-to-book capitalization increased to
46.6 percent at June 30, 2008 compared to 45.1 percent at December 31, 2007.
As a result of intensive expansion efforts, capital expenditures increased
to $178.2 million in the second quarter of 2008 compared to $76.8 million in
the second quarter of 2007. The expansion work is scheduled to continue at an
accelerated rate throughout the year. Full year 2008 CAPEX is now expected to
approximate $650 million.
Depreciation, depletion and amortization (DD&A) was $62.3 million in the
second quarter of 2008 compared to $60.2 million in the second quarter of
2007. DD&A is expected to total between $255 and $270 million for the full
year 2008.
Conference Call, Webcast and Replay
Members of the Company's senior management will hold a conference call to
discuss the second quarter results and operations on Friday, August 1, 2008,
at 11:00 a.m. ET. The call can be accessed via the Massey Energy Company
website at http://www.masseyenergyco.com. A replay of the call will be
available at the same site through September 1, 2008.
Company Description
Massey Energy Company, headquartered in Richmond, Virginia, with
operations in West Virginia, Kentucky and Virginia, is the fourth largest coal
company in the United States based on produced coal revenue and is included in
the S&P 500 index.
FORWARD-LOOKING STATEMENTS: Certain statements in this press release
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Exchange Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are intended to come within
the safe harbor protection provided by those sections. Any forward-looking
statements are also subject to a number of assumptions regarding, among other
things, future economic, competitive and market conditions. These assumptions
are 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. The Company disclaims any intent or
obligation to update these forward-looking statements unless required by
securities law, and the Company cautions the reader to not rely on them
unduly. Caution must be exercised in relying on forward-looking statements
including disclosures that use words such as "believe," "anticipate,"
"expect," "estimate," "intend," "may," "plan," "project," "will," and similar
words or statements that are subject to risks, trends and uncertainties that
could cause the Company's actual results to differ materially from the
expectations expressed or implied in such forward-looking statements. Factors
potentially contributing to such differences include, among others: worldwide
market demand for coal, electricity and steel; the successful completion of
acquisition, disposition or financing transactions; future economic or capital
market conditions; foreign currency fluctuations; governmental policies, laws,
regulatory actions and court decisions affecting the coal industry or our
customers' coal usage; competition among coal producers in the United States
and internationally; inherent risks of coal mining beyond the Company's
control, including weather and geologic conditions; the Company's ability to
expand mining capacity; the Company's production capabilities to meet market
expectations and customer requirements; the Company's strategic plans and
objectives for future operations and expansion or consolidation; the Company's
assumptions and projections concerning economically recoverable coal reserve
estimates; failure to receive anticipated new contracts; the Company's
reliance upon and relationships with our customers and suppliers; the
creditworthiness of the Company's customers and suppliers; adjustments made in
price, volume or terms to existing coal supply agreements; the Company's
ability to manage production costs, including labor costs; the Company's
ability to timely obtain necessary supplies and equipment; the Company's
ability to obtain and renew permits necessary for existing and planned
operations; the cost and availability of surety bonds; the Company's ability
to attract, train and retain a skilled workforce to meet replacement or
expansion needs; the cost and availability of transportation for the Company's
produced coal; legal and administrative proceedings, settlements,
investigations and claims and the availability of insurance coverage related
thereto; and environmental concerns related to coal mining and combustion.
Additional information concerning these and other factors can be found in
press releases and Massey's public filings with the Securities and Exchange
Commission, including Massey's Annual Report on Form 10-K for the year ended
December 31, 2007, which was filed on February 29, 2008, and subsequently
filed interim reports. Massey's filings are available either publicly, on the
Investor Relations page of Massey's website, http://www.masseyenergyco.com, or
upon request from Massey's Investor Relations Department: (866) 814-6512 (toll
free). For further information, please visit Massey's website at
http://www.masseyenergyco.com.

MASSEY ENERGY COMPANY
CONSOLIDATED FINANCIAL RESULTS - UNAUDITED
(in Millions, except # of employees, per share & per ton information)

For the three For the six
months ended months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Revenues
Produced coal revenue $710.3 $516.2 $1,253.5 $1,035.9
Freight and handling revenue 83.4 39.9 148.5 83.7
Purchased coal revenue 6.9 31.3 17.6 56.5
Other revenue 26.2 30.4 51.9 49.0
Total revenues 826.8 617.8 1,471.5 1,225.1

Costs and expenses
Cost of produced coal revenue 499.7 409.0 917.9 811.5
Freight and handling costs 83.4 39.9 148.5 83.7
Cost of purchased coal revenue 5.6 27.2 15.4 49.3
Depreciation, depletion and
amortization applicable to:
Cost of produced coal revenue 61.5 59.4 120.8 120.8
Selling, general and
administrative 0.8 0.8 1.8 1.6
Selling, general and
administrative 38.5 19.7 60.0 38.4
Other expense 0.6 1.7 1.4 4.1
Litigation charge 245.3 - 245.3 -
Total costs and expenses 935.4 557.7 1,511.1 1,109.4

(Loss) Income before interest and
taxes (108.6) 60.1 (39.6) 115.7
Interest income 3.6 6.8 8.8 12.2
Interest expense (20.8) (21.6) (41.8) (43.1)

(Loss) Income before taxes (125.8) 45.3 (72.6) 84.8
Income tax benefit (expense) 32.5 (10.4) 21.2 (17.3)

Net (loss) income $(93.3) $34.9 $(51.4) $67.5

Net (loss) income per share
Basic $(1.16) $0.43 $(0.64) $0.84
Diluted $(1.16) $0.43 $(0.64) $0.83

Shares used to calculate net (loss)
income per share
Basic 80.2 80.6 80.0 80.6
Diluted 80.2 81.7 80.0 81.3

EBIT $(108.6) $60.1 $(39.6) $115.7
EBITDA $(46.3) $120.3 $83.0 $238.1

Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007

Produced tons sold:
Utility 6.8 6.9 13.2 13.5
Metallurgical 3.0 2.2 5.2 4.5
Industrial 1.0 0.9 2.0 2.0
Total produced tons sold 10.8 10.0 20.4 20.0

Total tons produced 10.5 10.2 20.5 20.7

Produced coal revenue per ton sold
Utility $47.39 $45.17 $47.63 $45.09
Metallurgical $109.58 $72.16 $97.14 $72.94
Industrial $59.99 $49.34 $57.49 $50.24
Produced coal revenue per ton
sold $65.78 $51.40 $61.34 $51.83

Average cash cost per ton $49.84 $42.68 $47.85 $42.52

Capital expenditures $178.2 $76.8 $301.8 $136.7
Number of employees 5,877 5,389 5,877 5,389

June 30, December 31,
2008 2007
ASSETS

Cash and cash equivalents $351.9 $365.2
Trade and other accounts receivable 256.6 156.6
Inventories 188.6 183.4
Other current assets 191.3 182.2
Net property, plant and equipment 2,001.0 1,793.9
Other noncurrent assets 176.6 179.4

Total assets $3,166.0 $2,860.7

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term debt $1.9 $1.9
Other current liabilities 679.1 366.0
Long-term debt 1,102.1 1,102.7
Other noncurrent liabilities 631.4 606.1
Total liabilities 2,414.5 2,076.7

Total stockholders' equity 751.5 784.0

Total liabilities and stockholders'
equity $3,166.0 $2,860.7

Note 1: The number of shares used to calculate basic income per share is
based on the weighted average outstanding shares of Massey Energy during the
respective periods. The number of shares used to calculate diluted income per
share is based on the number of shares used to calculate basic income per
share plus the dilutive effect of stock options and other stock-based
instruments held by Massey Energy employees and directors each period and debt
securities convertible into common stock. In accordance with accounting
principles generally accepted in the United States, the effect of certain
dilutive securities was excluded from the calculation of the diluted income
per common share in the three and six months ended June 30, 2008, and 2007, as
such inclusion would result in antidilution.
Note 2: Litigation charge shown in Costs and expenses for the three and
six months ended June 30, 2008, relates to an accrual recorded in the second
quarter of 2008 in the amount of $245.3 million ($185.5 million
after-tax) for a specific legal action. On May 22, 2008, the West Virginia
Supreme Court of Appeals ("WV Supreme Court") decided not to hear an appeal of
the verdicts against Massey Energy or its subsidiary Central West Virginia
Energy Company ("CWVE") that awarded damages in favor of Wheeling-Pittsburgh
Steel Corporation and Mountain State Carbon, LLC in the amount of $219.9
million, comprised of $119.9 million compensatory and $100 million punitive
damages (plus an additional $24 million of pre-judgment interest). The WV
Supreme Court currently has extended its stay of the underlying verdict
through September 23, 2008, while CWVE and Massey Energy petition the United
States Supreme Court to review the matter. During such time the $50 million
bond previously posted by Massey Energy will remain in place. If after
September 23, 2008, Massey Energy has not heard whether the United States
Supreme Court will review the matter, they will request that the stay entered
by the WV Supreme Court be extended. If the WV Supreme Court rejects this
request, they will request a stay from the United States Supreme Court. Though
Massey Energy believes its petition to the United States Supreme Court has
merit, it recognizes that few cases are accepted for review. As discussed
above, in the second quarter of 2008, Massey Energy increased its legal
accrual for this case by $245.3 million for a total accrual of $262.7 million,
including interest, recorded in Other current liabilities.
Note 3: "Net income excluding the WP litigation charge" is defined as Net
(loss) income before the Wheeling Pittsburgh legal reserve increase (see Note
2) (which we consider a significant item that is not related to our ongoing,
underlying business and which distorts comparability of results). Although
Net income excluding the WP litigation charge is not a measure of performance
calculated in accordance with generally accepted accounting principles
("GAAP"), management believes that it is useful to an investor in evaluating
Massey because it provides a picture of our results that is comparable among
periods since it excludes the impact of an item which is non-recurring and
distorts comparisons between periods. Net income excluding the WP litigation
charge does not purport to represent operating income, net income or cash
generated by operating activities and should not be considered in isolation or
as a substitute for measures of performance in accordance with GAAP. In
addition, because Net income excluding the WP litigation charge is not
calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. The table
below reconciles the GAAP measure of Net (loss) income to Net income excluding
the WP litigation charge and the related per basic share amounts.

Three months ended June 30,
2008 Per Share 2007 Per Share
Net (loss) income $(93.3) $(1.16) $34.9 $0.43
Plus: Litigation charge, net
of tax 185.5 2.31 - -

Net income excluding the WP
litigation charge $92.2 $1.15 $34.9 $0.43

Six months ended June 30,
2008 Per Share 2007 Per Share
Net (loss) income $(51.4) $(0.64) $67.5 $0.84
Plus: Litigation charge, net
of tax 185.5 2.32 - -
Net income excluding the WP
litigation charge $134.1 $1.68 $67.5 $0.84

Note 4: EBIT is defined as Income before interest and taxes. EBITDA is
defined as Income before interest and taxes before deducting Depreciation,
depletion, and amortization ("DD&A"). EBITDA excluding the WP litigation
charge is defined as EBITDA before the Wheeling Pittsburgh legal reserve
increase (see Note 2) (which we consider a significant item that is not
related to our ongoing, underlying business and which distorts comparability
of results). Although neither EBIT, EBITDA nor EBITDA excluding the WP
litigation charge are measures of performance calculated in accordance with
GAAP, we believe that both measures are useful to an investor in evaluating us
because they are widely used in the coal industry as measures to evaluate a
company's operating performance before debt expense and as a measure of its
cash flow. Neither EBIT, EBITDA nor EBITDA excluding the WP litigation charge
purport to represent operating income, net income or cash generated by
operating activities and should not be considered in isolation or as a
substitute for measures of performance calculated in accordance with GAAP. In
addition, because neither EBIT, EBITDA nor EBITDA excluding the WP litigation
charge are calculated identically by all companies, the presentation here may
not be comparable to other similarly titled measures of other companies. The
table below reconciles the GAAP measure of Net income to EBIT, EBITDA and
EBITDA excluding the WP litigation charge.

Three months ended June 30, Six months ended June 30,
2008 2007 2008 2007
Net (loss) income $(93.3) $34.9 $(51.4) $67.5
Plus: Income tax
(benefit) expense (32.5) 10.4 (21.2) 17.3
Plus: Net interest
expense 17.2 14.8 33.0 30.9
EBIT (108.6) 60.1 (39.6) 115.7
Plus: Depreciation,
depletion and amortization 62.3 60.2 122.6 122.4
EBITDA $(46.3) $120.3 $83.0 $238.1
Plus: Litigation
charge 245.3 - 245.3 -
EBITDA excluding the WP
litigation charge $199.0 $120.3 $328.3 $238.1

Three months ended
March 31,
2008
Net income $41.9
Plus: Income tax
expense 11.3
Plus: Net interest expense 15.8
EBIT 69.0
Plus: Depreciation,
depletion and amortization 60.2
EBITDA $129.2
Plus: Litigation charge -
EBITDA excluding the WP
litigation charge $129.2

Note 5: Average cash cost per ton is calculated as the sum of Cost of
produced coal revenue and Selling, general and administrative expense ("SG&A")
(excluding DD&A), divided by the number of produced tons sold. Although
Average cash cost per ton is not a measure of performance calculated in
accordance with GAAP, we believe that it is useful to investors in evaluating
us because it is widely used in the coal industry as a measure to evaluate a
company's control over its cash costs. Average cash cost per ton should not be
considered in isolation or as a substitute for measures of performance in
accordance with GAAP. In addition, because Average cash cost per ton is not
calculated identically by all companies, the presentation here may not be
comparable to other similarly titled measures of other companies. The table
below reconciles the GAAP measure of Total costs and expenses to Average cash
cost per ton.

Three months ended June 30,
2008 2007
$ Per Ton $ Per Ton
Total costs and expenses $935.4 $557.7
Less: Freight and handling costs 83.4 39.9
Less: Cost of purchased coal revenue 5.6 27.2
Less: Depreciation, depletion and
amortization 62.3 60.2
Less: Other expense 0.6 1.7
Less: Litigation charge 245.3 -
Average cash cost $538.2 $49.84 $428.7 $42.68

Six months ended June 30,
2008 2007
$ Per Ton $ Per Ton
Total costs and expenses $1,511.1 $1,109.4
Less: Freight and handling costs 148.5 83.7
Less: Cost of purchased coal revenue 15.4 49.3
Less: Depreciation, depletion and
amortization 122.6 122.4
Less: Other expense 1.4 4.1
Less: Litigation charge 245.3 -
Average cash cost $977.9 $47.85 $849.9 $42.52

Three months ended
March 31,
2008
$ Per Ton
Total costs and expenses $575.6
Less: Freight and handling costs 65.0
Less: Cost of purchased coal revenue 9.9
Less: Depreciation, depletion and
amortization 60.2
Less: Other expense 0.8
Less: Litigation charge -
Average cash cost $439.7 $45.62

Note 6: The Company's debt is comprised of the following:

June 30, December 31,
2008 2007
6.785% senior notes due 2013, net of discount $755.7 $755.4
6.625% senior notes due 2010 335.0 335.0
2.25% convertible senior notes due 2024 9.6 9.6
4.75% convertible senior notes due 2023 0.1 0.7
Capital lease obligations 7.9 8.9
Fair value hedge adjustment (4.3) (5.0)
Total debt 1,104.0 1,104.6
Less: short-term debt 1.9 1.9
Total long-term debt $1,102.1 $1,102.7

Note 7: "Net debt" is calculated as the sum of Short-term debt and
Long-term debt less Cash and cash equivalents and Restricted cash, which is
included in Other current assets. Although Net debt is not a measure of
performance calculated in accordance with GAAP, management believes that it is
useful to an investor in evaluating Massey Energy because it provides a
clearer comparison of the Company's debt position from period to period. Net
debt should not be considered in isolation or as a substitute for measures of
performance in accordance with GAAP. The table below reconciles the GAAP
measure of Long-term debt to Net debt.

June 30, December 31,
2008 2007
Long-term debt $1,102.1 $1,102.7
Plus: Short-term debt 1.9 1.9
Less: Cash and cash equivalents 351.9 365.2
Less: Restricted cash 96.0 96.0
Net debt $656.1 $643.4

Note 8: The "Total debt-to-book capitalization" ratio is calculated as
the sum of Short-term debt and Long-term debt divided by the sum of Short-term
debt, Long-term debt and Total shareholders' equity. The "Total net
debt-to-book capitalization" ratio is calculated as the sum of Net debt
(calculated in Note 7) divided by the sum of Net debt and Total shareholders'
equity. The tables below calculate the Total debt-to-book capitalization and
Total net debt-to-book capitalization ratios.
June 30, December 31,
2008 2007
Long-term debt $1,102.1 $1,102.7
Plus: Short-term debt 1.9 1.9
Total debt (numerator) 1,104.0 1,104.6

Plus: Total stockholders' equity 751.5 784.0
Book capitalization (denominator) $1,855.5 $1,888.6

Total debt-to-book capitalization ratio 59.5% 58.5%
Net debt (from Note 7) (numerator) 656.1 643.4
Plus: Total stockholders' equity 751.5 784.0
Adjusted book capitalization (denominator) $1,407.6 $1,427.4

Total net debt-to-book capitalization ratio 46.6% 45.1%

Note 9: "Operating cash margin per ton" is calculated as the difference
between Produced coal revenue per ton sold (Produced coal revenue divided by
Total produced tons sold) and Average cash cost per ton (computed in Note 5).
Although Operating cash margin per ton is not a measure of performance
calculated in accordance with GAAP, management believes that it is useful to
an investor in evaluating Massey Energy because it is widely used in the coal
industry as a measure to evaluate a company's profitability from produced tons
sold. Operating cash margin per ton should not be considered in isolation or
as a substitute for measures of performance in accordance with GAAP. In
addition, because Operating cash margin per ton may not be calculated
identically by all companies, the presentation here may not be comparable to
other similarly titled measures of other companies. The table below
reconciles the GAAP measure of Produced coal revenue to Operating cash margin
per ton.

Three months ended
June 30, 2008 June 30, 2007
$ Per Ton $ Per Ton
Produced coal revenue $710.3 $65.78 $516.2 $51.40
Less: Average cash cost
(from Note 5) 538.2 49.84 428.7 42.68
Operating cash margin $172.1 $15.94 $87.5 $8.72

Note 10: Other income is calculated as the sum of Purchased coal revenue
and Other revenue less Cost of purchased coal revenue and Other expense.
Although Other income is not a measure of performance calculated in accordance
with GAAP, management believes that it is useful to investors in evaluating
Massey Energy because it is a widely used measure of gross income from non-
core sources. Other income should not be considered in isolation or as a
substitute for measures of performance in accordance with GAAP. In addition,
because Other income is not calculated identically by all companies, the
presentation here may not be comparable to other similarly titled measures of
other companies. The table below reconciles the GAAP measure of Other revenue
to Other income.

Three months ended June 30, Six months ended June 30,
2008 2007 2008 2007
Other revenue $26.2 $30.4 $51.9 $49.0
Plus: Purchased coal
revenue 6.9 31.3 17.6 56.5
Less: Cost of purchased
coal revenue 5.6 27.2 15.4 49.3
Less: Other expense 0.6 1.7 1.4 4.1
Other income $26.9 $32.8 $52.7 $52.1

SOURCE Massey Energy Company

Roger Hendriksen, Director, Investor Relations, of Massey Energy Company,
+1-804-788-1824