Impairment Charges and Mine Closure Costs

The following discussions describe the costs reflected on the line "Asset impairment and mine closure costs" in the consolidated statements of operations.

In response to weak metallurgical coal markets the Company idled a higher-cost mining complex in the third quarter of 2014 in order to concentrate on metallurgical coal production from its lowest-cost and highest-margin operations. Closure charges of $5.1 million were recognized during the third quarter of 2014 relating to the idling.

During the Company's annual budgeting process for 2015, a review of our forecasted revenues indicated that the remaining balance of advance royalty payments made on a reserve base supplying the Company's Mountain Laurel, Spruce Mine and Briar Branch operations would not be recoupable against future royalties payments. Under the lease, any unrecouped advance payment balance at March 31, 2017 will be forfeited by the Company. Based on estimates of sales volumes and pricing through the end of the recoupment period, an impairment charge was recorded for$15.4 million of the remaining $48.0 million balance that would not be recouped.

As a result of the weak thermal coal markets in Appalachia, the Company assessed in the third quarter of 2013 whether the carrying values of certain assets were recoverable through future cash flows. The Company determined that the carrying amounts of certain assets associated with the Hazard mining complex in Kentucky and the Company's ADDCAR subsidiary, which manufactures and sells its patented highwall mining system, could not be recovered through future cash flows expected to be generated from use of the assets and their ultimate disposal.

The assets' fair values were determined based on projections of cash flows to be generated from use of the assets and their ultimate disposal including estimates relating to market demand, coal prices, production costs and mine plans, and recovery value of the assets. An impairment charge of $142.8 million was recognized to adjust the carrying value of the assets to their fair value of $71.3 million.

During 2013, the Company also recognized other-than-temporary impairment charges related to equity method investments. See further discussion in Note 9, "Equity Method Investments and Membership Interests in Joint Ventures."

In 2012, the closure and idling of mines in Appalachia discussed in Note 1, "Basis of Presentation" resulted in closure costs and related impairment charges as follow:



	In millions
Parts and supplies inventory writedown	$	2.6
Impairment of property, plant and equipment	95.6
Impairment of coal properties and deferred development costs	403.3
Royalty obligations	11.5
Employee termination benefits	12.3
Pension, postretirement and occupational disease curtailment gain, net	(1.8		)
	$	523.5

In 2012, the value of an acquired sales contract was also determined to be impaired, see further discussion in Note 10, "Acquired Sales Contracts " for further discussion.