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Impairment Charges
6 Months Ended
Jun. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
Impairment Charges
3. Impairment Charges
During the second quarter of 2014, the Company solicited bids related to the potential sale of its coal mining operations. Due to the level of interest observed in the market, the Company concluded that it was more-likely-than-not that the assets would be sold, but the asset group had not met the criteria to be classified as held-for-sale as of the balance sheet date. See events subsequent to the balance sheet date discussed in Note 17. Due to the likely disposition of the assets as well as projected losses resulting from the weakening coal market, the Company evaluated the recoverability of its long-lived asset group. The Company performed a probability-weighted undiscounted cash flows analysis which indicated that the carrying value of the asset group was not recoverable. As such, the Company recorded a pre-tax impairment charge of $97.1 million in its coal mining segment to write down the long-lived assets to their estimated fair value.  The fair value was determined based on estimated discounted cash flows from the coal mining assets, which reflected the weakness in the coal market and were considered Level 3 inputs in the fair value hierarchy. Key assumptions included (a) coal sales prices of $97 per ton to $149 per ton; (b) sales volumes of 1.6 million tons to 1.8 million tons; and (c) a 14.0 percent discount rate representing the estimated weighted average cost of capital. Various third party offers for the assets were considered and were also included in the Company's assessment of the fair value of the assets. In previous analyses, based upon the business plan and market expectations of coal prices at that time, the carrying value was recoverable and was substantially in excess of the undiscounted cash flows.  Recent changes in market conditions, specifically decreased coal sales price expectations, were included in our current asset impairment analysis.
As a result of the likely sale of the business, the weakening coal market and the long-lived asset impairment discussed above, the Company also performed a goodwill impairment analysis as of June 30, 2014 for the coal mining reporting unit. This analysis concluded the fair value of the reporting unit, based on a discounted cash flows analysis, was less than the carrying amount. As a result, the Company recorded a $6.0 million pre-tax impairment of the entire goodwill balance within the coal mining segment.
The total pre-tax non-cash impairment charge of $103.1 million was recorded in asset and goodwill impairment in the Consolidated Statement of Operations.