• price volatility and demand, particularly in higher-margin products and in our trading and brokerage businesses;

• reductions and/or deferrals of purchases by major customers and ability to renew sales contracts;

• credit and performance risks associated with customers, suppliers, trading and banks and other financial counterparties;

• geologic, equipment, permitting and operational risks related to mining;

• transportation availability, performance and costs;

• availability, timing of delivery and costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives and tires;

• impact of weather on demand, production and transportation;

• successful implementation of business strategies, including our Btu Conversion and generation development initiatives;

• negotiation of labor contracts, employee relations and workforce availability;

• changes in postretirement benefit and pension obligations and funding requirements;

• replacement of coal reserves;

• access to capital and credit markets and availability and costs of credit, margin capacity, surety bonds, letters of credit, and insurance;

• effects of changes in interest rates and currency exchange rates (primarily the Australian dollar);

• effects of acquisitions or divestitures;

• economic strength and political stability of countries in which we have operations or serve customers;

• legislation, regulations and court decisions or other government actions, including new environmental requirements affecting the use of coal;

• litigation, including claims not yet asserted;

• terrorist attacks or threats;

• impacts of pandemic illnesses; and

• other factors, including those discussed in Legal Proceedings.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this document and in our other Securities and Exchange Commission (SEC) filings, including the more detailed discussion of these factors, as well as other factors that could affect our results, contained in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. These forward-looking statements speak only as of the date on which such statements were made, and we undertake no obligation to update these statements except as required by federal securities laws. Overview
We are the world's largest private-sector coal company, with majority interests in 29 coal mining operations located in the Midwestern and Western U.S. and in Queensland and New South Wales in Australia, and a minority interest in coal mining operations in Venezuela.

For the year ended December 31, 2008, 82% of our total sales (by volume) were to U.S. electricity generators, 16% were to customers outside the U.S. and 2% were to the U.S. industrial sector. In the U.S., we typically sell coal to utility customers under long-term contracts (those with terms longer than one year). Internationally, we sell coal to coal-based electricity generating stations and steel producing facilities. During 2008, approximately 90% of our worldwide sales (by volume) were under long-term contracts. We conduct business through three principal operating segments: Western U.S. Mining, Midwestern U.S. Mining, and Australian Mining. In addition to our mining operations, we market, broker and trade coal through our Trading and Brokerage segment.
The long-term demand for oil and natural gas around the world is expected to lead to an increase in demand for unconventional sources of both fuels. We continue to explore Btu Conversion projects designed to expand the uses of coal through coal-to-liquids and coal gasification technologies. We are also participating in the advancement of clean coal technologies, including carbon capture and storage, in the U.S., China and Australia. Results of Operations
The results of operations for all periods presented reflect the assets, liabilities and results of operations from subsidiaries spun off as Patriot Coal Corporation (Patriot) as discontinued operations. We also have classified as discontinued operations certain non-strategic mining assets held for sale where we have committed to the divestiture of such assets and operations recently divested.
Adjusted EBITDA
The discussion of our results of operations below includes references to and analysis of our segments' Adjusted EBITDA results. Adjusted EBITDA is defined as income from continuing operations before deducting net interest expense, income taxes, asset retirement obligation expense and depreciation, depletion and amortization. Adjusted EBITDA is used by management to measure our segments' operating performance, and management also believes it is a useful indicator of our ability to meet debt service and capital expenditure requirements. Because Adjusted EBITDA is not calculated identically by all companies, our calculation may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is reconciled to its most comparable measure, under U.S. generally accepted accounting principles (GAAP), in Note 14 to our unaudited condensed consolidated financial statements.
Three and Nine Months Ended September 30, 2009 Compared to Three and Nine Months Ended September 30, 2008
Summary
Year-to-date sales volume of 182.4 million tons was 3.4 million tons below prior year levels while the third quarter volume of 63.5 million tons was 2.1 million tons below prior year reflecting planned reductions in production in the Powder River Basin to match lower demand and lower customer shipments in Australia driven primarily by reduced demand due to the global economic downturn. Year-to-date revenues of $4.5 billion fell $208.9 million, or 4.5%, below prior year while third quarter revenues of $1.7 billion fell $222.6 million, or 11.8%, below the third quarter of the prior year driven by Australia's lower annual export contract pricing that commenced on April 1, 2009 and an overall volume decrease. Year-to-date revenues were also unfavorable to prior year due to the $56.9 million revenue recovery on a long-term coal supply agreement in the second quarter of 2008.
Partially offsetting the quarter and year-to-date decreases to revenues was an increase in U.S. revenues per ton, reflecting higher priced Midwestern U.S. contracts signed in the prior year as well as a change in mix toward higher-priced Western U.S. coal products. Australian revenues for the third quarter 2009 were favorably impacted by an increase in metallurgical coal volume shipped over the prior year.
Segment Adjusted EBITDA decreased $250.4 million for the three months ended September 30, 2009 and $258.9 million for the nine months ended September 30, 2009 compared to the prior year primarily due to the reasons noted above. Also unfavorably impacting Segment Adjusted EBITDA were geology issues and longwall performance at our Australian mines and higher labor costs.

Income from continuing operations, net of income taxes, decreased by $270.0 million for the three months ended September 30, 2009 and $363.2 million for the nine months ended September 30, 2009 compared to the prior year due to the Segment Adjusted EBITDA items noted previously. Also unfavorably impacting income from continuing operations, net of income taxes are the following items:
• Lower gains on the sale or exchange of coal reserves and surface lands;

• Lower income from equity affiliates; and

• Increased income tax provision driven by remeasurement of non-U.S. tax accounts (nine months).

These unfavorable items were partially offset by lower interest expense. Tons Sold
The following table presents tons sold by operating segment:

                              Three Months Ended                                            Nine Months Ended
                                September 30,               Increase (Decrease)               September 30,              Increase (Decrease)
                              2009           2008           Tons             %             2009           2008            Tons            %
                                      (Tons in millions)                                           (Tons in millions)
Western U.S. Mining            42.0          42.8            (0.8 )         (1.9 )%        121.5          124.3            (2.8 )        (2.3 )%
Midwestern U.S. Mining          7.9           7.8             0.1            1.3 %          24.0           22.9             1.1           4.8 %
Australian Mining               6.5           6.9            (0.4 )         (5.8 )%         15.9           17.6            (1.7 )        (9.7 )%
Trading and Brokerage           7.1           8.1            (1.0 )        (12.3 )%         21.0           21.0               -           0.0 %

Total tons sold                63.5          65.6            (2.1 )         (3.2 )%        182.4          185.8            (3.4 )        (1.8 )%

Revenues
   The following table presents revenues by operating segment:

                             Three Months Ended            Increase (Decrease)             Nine Months Ended             Increase (Decrease)
                               September 30,                   to Revenues                   September 30,                   to Revenues
                            2009           2008              $               %            2009           2008              $               %
                                    (Dollars in millions)                                         (Dollars in millions)
Western U.S. Mining       $   683.6      $   624.9      $      58.7           9.4 %     $ 1,972.8      $ 1,860.8      $     112.0           6.0 %
Midwestern U.S. Mining        327.5          297.6             29.9          10.0 %         978.0          845.2            132.8          15.7 %
Australian Mining             537.3          781.1           (243.8 )       (31.2 )%      1,206.6        1,589.3           (382.7 )       (24.1 )%
Trading and Brokerage         112.9          181.5            (68.6 )       (37.8 )%        284.8          352.9            (68.1 )       (19.3 )%
Corporate and Other             5.7            4.5              1.2          26.7 %          16.0           18.9             (2.9 )       (15.3 )%

Total revenues            $ 1,667.0      $ 1,889.6      $    (222.6 )       (11.8 )%    $ 4,458.2      $ 4,667.1      $    (208.9 )        (4.5 )%

Year-to-date revenues of $4.5 billion fell $208.9 million, or 4.5%, below prior year while third quarter revenues of $1.7 billion fell $222.6 million, or 11.8%. The primary drivers included the following:
• Australian Mining operations' average sales price decreased from the prior year reflecting the lower annual export contract pricing that commenced April 1, 2009 (three months, 27.8%; nine months, 15.8%). The price decreases were combined with volume decreases from the prior year (three months, 5.8%; nine months, 9.7%) due to overall lower demand. Year-to-date metallurgical coal shipments of 4.6 million tons were 1.9 million tons below prior year, while Company-record third quarter metallurgical coal shipments of 2.7 million tons were 0.2 million tons above prior year, reflecting a partial recovery from the lower metallurgical coal shipments that occurred in the first half of the year.

• Trading and Brokerage operations' revenues decreased from the prior year due to lower price volatility in the current year, partially offset by certain higher margin structured transactions and higher international revenues in the current year.

• Western U.S. Mining operations' average sales price increased over the prior year driven by a change of mix toward higher-priced Western coal products (three months, 11.6%; nine months, 8.5%). Year-to-date revenues were also higher due to increased shipments from our El Segundo Mine (commissioned in June 2008). These increases were partially offset by the prior year revenue recovery on a long-term coal supply agreement ($56.9 million) and an overall volume decrease reflecting our planned Powder River Basin production decreases (three months, 1.9%; nine months, 2.3%).

• Midwestern U.S. Mining operations' average sales price increased over the prior year (three months, 9.4%; nine months, 10.7%) driven by the benefit of higher Illinois Basin prices and increased shipments, including purchased coal used to satisfy certain coal supply agreements.

Segment Adjusted EBITDA
   The following table presents Adjusted EBITDA by operating segment:

                                                        Increase (Decrease)                                          Increase (Decrease) to
                          Three Months Ended            to Segment Adjusted             Nine Months Ended               Segment Adjusted
                            September 30,                     EBITDA                      September 30,                      EBITDA
                          2009           2008             $               %            2009           2008              $                %
                                 (Dollars in millions)                                         (Dollars in millions)
Western U.S. Mining    $    208.6       $ 155.7      $      52.9          34.0 %     $   543.9      $   497.4      $       46.5            9.3 %
Midwestern U.S.
Mining                       67.0          46.9             20.1          42.9 %         207.4          126.0              81.4           64.6 %
Australian Mining           108.2         423.1           (314.9 )       (74.4 )%        319.1          668.6            (349.5 )        (52.3 )%
Trading and
Brokerage                    44.2          52.7             (8.5 )       (16.1 )%        145.2          182.5             (37.3 )        (20.4 )%

Total Segment
Adjusted EBITDA        $    428.0       $ 678.4      $    (250.4 )       (36.9 )%    $ 1,215.6      $ 1,474.5      $     (258.9 )        (17.6 )%

Australian Mining operations' Adjusted EBITDA for the nine months ended September 30, 2009 decreased compared to the prior year due to:
• Lower annual export contract pricing that commenced April 1, 2009 and the decreased margin from lower volume due to reduced demand ($212.0 million); and

• Higher production costs ($146.2 million) driven by increased overburden stripping ratios and decreased longwall mine performance, which included three first quarter 2009 longwall moves, partially offset by the lower average Australian exchange rate.

Australian Mining operations' Adjusted EBITDA for the quarter ended September 30, 2009 decreased compared to the prior year due to lower annual export contract pricing that commenced April 1, 2009 ($288.7 million) and unfavorable geology driven by increased overburden stripping ratios ($50.0 million), partially offset by the lower average Australian exchange rate ($22.1 million).
Trading and Brokerage operations' Adjusted EBITDA decreased compared to prior year (three months, $8.5 million; nine months, $37.3 million) primarily due to lower price volatility in the current year, partially offset by certain higher margin structured transactions and higher international revenues in the current year.
Western U.S. Mining operations' Adjusted EBITDA increased over the prior year driven by an overall increase in average sales prices across the region (three months, $42.4 million; nine months, $133.1 million) and decreased commodity costs (three months, $13.9 million; nine months, $26.2 million).
Partially offsetting the above increases to Western U.S. Mining operations' Adjusted EBITDA was:
• The second quarter 2008 revenue recovery on a long-term coal supply agreement ($56.9 million); and

• Increased labor, maintenance and repair costs, and higher fuel usage (three months, $2.8 million; nine months, $54.1 million).

Midwestern U.S. Mining operations' Adjusted EBITDA increased over the prior year primarily due to:
• An increase in the average sales price (three months, $27.5 million; nine months, $90.1 million);

• Decreased commodity costs (three months, $5.1 million; nine months, $11.6 million); and

• Increased margin resulting from purchased coal used to satisfy customer requirements (three months, $2.8 million; nine months, $7.5 million).

Partially offsetting the above increases to Midwestern U.S. Mining operations' Adjusted EBITDA was increased labor costs relating to the redeployment from one of our recently closed mines to existing mines and increased materials and services costs (nine months, $23.3 million).
Income From Continuing Operations Before Income Taxes The following table presents income from continuing operations before income taxes:

                          Three Months Ended            Increase (Decrease)             Nine Months Ended             Increase (Decrease)
                            September 30,                    to Income                    September 30,                    to Income
                          2009           2008             $               %            2009           2008              $               %
                                 (Dollars in millions)                                         (Dollars in millions)
Total Segment
Adjusted EBITDA        $    428.0      $  678.4      $    (250.4 )       (36.9 )%    $ 1,215.6      $ 1,474.5      $    (258.9 )       (17.6 )%
Corporate and Other
Adjusted EBITDA             (86.9 )       (64.6 )          (22.3 )       (34.5 )%       (222.9 )       (131.3 )          (91.6 )       (69.8 )%
Depreciation,
depletion and
amortization               (108.0 )      (101.7 )           (6.3 )        (6.2 )%       (305.5 )       (284.4 )          (21.1 )        (7.4 )%
Asset retirement
obligation expense          (12.8 )       (15.5 )            2.7          17.4 %         (31.8 )        (31.2 )           (0.6 )        (1.9 )%
Interest expense            (52.3 )       (54.4 )            2.1           3.9 %        (151.6 )       (171.6 )           20.0          11.7 %
Interest income               2.2           3.5             (1.3 )       (37.1 )%          6.2            7.0             (0.8 )       (11.4 )%

Income from
continuing
operations before
income taxes           $    170.2      $  445.7      $    (275.5 )       (61.8 )%    $   510.0      $   863.0      $    (353.0 )       (40.9 )%

Income from continuing operations before income taxes for the three and nine months ended September 30, 2009 was lower than the prior year primarily due to the lower Total Segment Adjusted EBITDA discussed above, lower Corporate and Other Adjusted EBITDA, and increased depreciation, depletion and amortization, partially offset by a decline in interest expense.
Corporate and Other Adjusted EBITDA results include selling and administrative expenses, equity income (loss) from our joint ventures, net gains on asset disposals or exchanges, costs associated with past mining obligations and revenues and expenses related to our other commercial activities such as generation development and Btu Conversion development costs. The decrease of $22.3 million and $91.6 million in Corporate and Other Adjusted EBITDA during the three and nine months ended September 30, 2009, respectively, compared to 2008 was due to the following:
• Lower net gains on disposals or exchanges of assets (three months, $2.0 million; nine months, $51.6 million). The lower net gains on disposals or exchanges during the nine months ended September 30, 2009 were due to a $54.0 million gain in the prior year from the sale of non-strategic coal reserves and surface lands located in Kentucky;

• Lower results from equity affiliates (three months, $8.5 million; nine months, $25.6 million) primarily from our 25.5% interest in Carbones del Guasare (owner and operator of the Paso Diablo Mine in Venezuela), which is primarily the result of lower productivity and higher costs due to ongoing labor issues; and

• Increased selling and administrative costs (three months, $11.1 million; nine months, $10.6 million) primarily related to increased labor due to continued international expansion and other corporate initiatives.

Depreciation, depletion and amortization was higher compared to the prior year (three months, $6.3 million; nine months, $21.1 million) due to:
• Increased asset depletion at our North Antelope Rochelle Mine due to the impact of mining higher value coal reserves, partially offset by lower depletion at certain other mines resulting from lower production; and

• Increased asset depreciation primarily associated with the addition of a blending and loading system at our North Antelope Rochelle Mine in mid-2008 (nine months).

Interest expense was lower compared to the prior year (three months, $2.1 million; nine months, $20.0 million) resulting from lower variable interest rates on our Term Loan Facility and accounts receivable securitization program and lower average borrowings on our Revolving Credit Facility. Net Income Attributable to Common Stockholders The following table presents net income attributable to common stockholders:

                          Three Months Ended            Increase (Decrease)             Nine Months Ended            Increase (Decrease)
                            September 30,                    to Income                    September 30,                   to Income
                          2009           2008             $               %            2009           2008             $              %
                                 (Dollars in millions)                                        (Dollars in millions)
Income from
continuing
operations before
income taxes           $    170.2       $ 445.7      $    (275.5 )       (61.8 )%    $   510.0      $  863.0      $    (353.0 )       (40.9 )%
Income tax
provision                   (57.0 )       (62.5 )            5.5           8.8 %        (165.6 )      (155.4 )          (10.2 )        (6.6 )%

Income from
continuing
operations, net of
income taxes                113.2         383.2           (270.0 )       (70.5 )%        344.4         707.6           (363.2 )       (51.3 )%
Income (loss) from
discontinued
operations                   (2.4 )       (11.4 )            9.0          78.9 %          23.6         (42.1 )           65.7         156.1 %

Net income                  110.8         371.8           (261.0 )       (70.2 )%        368.0         665.5           (297.5 )       (44.7 )%
Less: Net income
attributable to
noncontrolling
interests                     4.0           2.3             (1.7 )       (73.9 )%         12.0           5.7             (6.3 )      (110.5 )%

Net income
attributable to
common stockholders    $    106.8       $ 369.5      $    (262.7 )       (71.1 )%    $   356.0      $  659.8      $    (303.8 )       (46.0 )%

Net income attributable to common stockholders was lower for both periods compared to the prior year due to the decrease in income from continuing operations before income taxes discussed above.
Income tax provision was impacted by the following:
• Increased expense associated with the remeasurement of non-U.S. tax accounts as a result of the strengthening Australian dollar against the U.S dollar (three months, $85.0 million; nine months, $98.4 million; the table below illustrates the foreign currency exchange rate fluctuations); and

                                    September 30,                          June 30,                          December 31,
                                2009              2008              2009              2008              2008              2007
Australian dollar to
U.S. dollar exchange

• The prior year release of a valuation allowance (nine months, $45.3 million); partially offset by

• Lower pre-tax earnings, which drove a decrease to the income tax provision (three months, $96.5 million; nine months, $123.6 million).

Favorably impacting net income attributable to common stockholders was an increase in income from discontinued operations for the nine months ended September 30, 2009 of $65.7 million, which related primarily to the excise tax refund receivable recognized during the first quarter of 2009. See Note 4 to the unaudited condensed consolidated financial statements for more information related to the excise tax refund.

Outlook
Near-Term Outlook
The global economic downturn that began in late 2008 reduced gross domestic product (GDP) expectations in all major world economies from their pre-recession levels, which tempered spot pricing and coal demand in the near term. Global economies are showing signs of improvement, with 2009 global GDP expectations revised upwards during the third quarter and 2010 economic forecasts estimating a three percent expansion - although slower than expected economic improvement could temper these estimates. The Asia-Pacific markets continue to outpace the U.S. and European markets in economic growth and therefore electricity generation and steel production. Year-to-date through August 2009, China and India are the only steel producing 'majors' outpacing prior-year levels, with all other nations running 35% lower on average. Due to reduced steel production for 2009, metallurgical coal producers have also lowered planned production levels.
During the second and third quarters of 2009, we reached agreements with customers for nearly all of the 2009 metallurgical coal volumes for contracts . . .