First quarter 2005 revenues increased 35 percent from pro forma revenues in the corresponding period of 2004, driven primarily by higher shipments and higher average realizations. Coal shipments increased to 17.3 million tons, a 12 percent gain, largely because of a return to more normal operating conditions at the company's Pennsylvania mines. In the first quarter of 2004, production was affected by: (a) the idling of the Cumberland Mine's longwall for approximately one half of the first quarter because of a ventilation issue; and (b) the inclusion of a scheduled longwall move at the Emerald Mine. First quarter 2005 coal shipments also increased in the Powder River Basin as a result of a higher volume of sales than in the prior year. Average realizations for the company improved 20 percent, favorably impacted by higher prices on recent coal supply agreements, principally in Appalachia; higher quality premiums for calorific and sulfur content, due in part to historically high prices for sulfur dioxide allowances; and a greater proportion of higher priced Northern Appalachian shipments in relation to total shipments.
Financial results for the first quarter of 2004 are provided on two different bases of reporting. The first, referred to as the "predecessor" basis, is that reported by RAG American Coal Holding, Inc., which was sold to Foundation Coal Holdings, Inc. on July 30, 2004. The second, or "pro forma" basis, presents the first quarter of 2004 as if Foundation Coal Holdings, Inc.: (a) acquired RAG American Coal Holding, Inc. on January 1, 2004; (b) completed the Initial Public Offering on January 1, 2004; and (c) transacted the sale of the RAG Colorado Business Unit and associated repayment of predecessor bank debt and settlement of predecessor interest rate swaps on December 31, 2003. The pro forma presentation incorporates the fair valuation of the assets and liabilities acquired by Foundation Coal Holdings, Inc. on July 30, 2004 ("purchase accounting"). An attached table presents the pro forma adjustments.
Certain statements relating to the future prospects, developments, business strategies, analyses and other information that is based on forecasts of future results and estimates of amounts not yet determinable are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) which can be identified as any statement that does not relate strictly to historical or current facts. The company has used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project" and similar terms and phrases, including references to assumptions, to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting the company and are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond the company's control, that could cause the company's actual results to differ materially from those matters expressed in or implied by these forward-looking statements. These factors include, but are not limited to: market demand for coal, electricity and steel; weather conditions or catastrophic weather-related damage; the company's production capabilities; timing of reductions or increases in customer coal inventories; long-term coal supply arrangements; environmental laws, including those directly affecting the company's coal mining and production, and those affecting the company's customers' coal usage; regulatory and court decisions; railroad, barge, trucking and other transportation performance and costs; our assumptions concerning economically recoverable coal reserve estimates; employee workforce factors; changes in postretirement benefit and pension obligations; the company's liquidity, results of operations and financial condition. The company advises investors that it discusses additional risk factors and uncertainties that could cause Foundation Coal Holdings Inc. actual results to differ from forward-looking statements in the company's Form 10-K for the Fiscal Year ending December 31, 2004 filed with the Securities and Exchange Commission ("SEC") under the heading "Risk Factors". The investor should keep in mind that any forward-looking statement made by the company in this news release or elsewhere speaks only as of the date on which the company makes it. New risks and uncertainties come up from time to time, and it is impossible for the company to predict these events or how they may affect the company. The company has no duty to, and does not intend to, update or revise the forward-looking statements in this news release after the date of issue, except as may be required by law. In light of these risks and uncertainties, the investor should keep in mind that any forward-looking statement made in this news release or elsewhere might not occur.