Acquired Sales Contracts

6 Months Ended

Jun. 30, 2011

Acquired Sales Contracts

Acquired Sales Contracts

6. Acquired Sales Contracts

Coal supply agreements (sales contracts) acquired in a business combination are capitalized at their fair value and amortized over the tons of coal shipped during the term of the contract. The fair value of a sales contract is determined by discounting the cash flows attributable to the difference between the contract price and the prevailing forward prices for the tons under contract at the date of acquisition. Below are the acquired sales contracts reflected in the condensed consolidated balance sheets:

	June 30, 2011			December 31, 2010
	(In thousands)
Location in Balance Sheet
Other current assets	$	35,496		$	25,063
Other assets	24,622			7,014
Total	60,118			32,077
Accrued expenses and other current liabilities	(80,411		)	(5,615		)
Other noncurrent liabilities	(58,787		)	(20,426		)
Total	(139,198		)	(26,041		)
Net total	$	(79,080	)	$	6,036

Above-market contracts with a preliminary fair value of $43.3 million and below-market contracts with a preliminary fair value of $121.0 million were acquired from ICG. Of these amounts, $22.7 million and $75.4 million were classified as current assets and current liabilities, respectively, at the acquisition date.

The Company anticipates amortization income of all acquired sales contracts, based upon the preliminary fair value assigned to acquired ICG sales contracts and expected shipments in the next five years, to be approximately $41 million for the remainder of 2011, $10 million in 2012, $6 million in 2013, $9 million in 2014 and $13 million in 2015.