Exhibit 99.3
Reconciliation of North American Coal’s
Return on Capital Employed
(U.S. dollars | ||||
in millions) | ||||
2009 | ||||
2009 Average Equity (12/31/2008 and each of 2009’s quarter ends) | $ | 102.0 | ||
2009 Average Debt (12/31/2008 and at each of 2009’s quarter ends) | 85.5 | |||
Total 2009 average capital employed | $ | 187.5 | ||
2009 Net income, as reported | $ | 53.2 | ||
Plus: 2009 Interest expense, as reported | 4.1 | |||
Less: Income taxes on 2009 interest expense at 38%* | (1.6 | ) | ||
Actual return on capital employed = actual net income before interest expense, after tax | $ | 55.7 | ||
Actual return on capital employed percentage | 29.7 | % | ||
Less: Discontinued operations, net of tax | (22.6 | ) | ||
Adjusted return on capital employed = income from continuing operations before interest expense, after tax | $ | 33.1 | ||
Adjusted return on capital employed percentage | 17.7 | % | ||
2008 | ||||
2008 average equity (12/31/2007 and each of 2008’s quarter ends) | $ | 84.1 | ||
2008 average debt (12/31/2007 and at each of 2008’s quarter ends) | 107.1 | |||
Total 2008 average capital employed | $ | 191.2 | ||
2008 Net income, as reported | $ | 22.1 | ||
Plus: 2008 Interest expense, as reported | 5.5 | |||
Less: Income taxes on 2008 interest expense at 38%** | (2.1 | ) | ||
Actual return on capital employed = actual net income before interest expense, after tax | $ | 25.5 | ||
Actual return on capital employed percentage | 13.3 | % | ||
Less: Discontinued operations, net of tax | (2.3 | ) | ||
Adjusted return on capital employed = income from continuing operations before interest expense, after tax | $ | 23.2 | ||
Adjusted return on capital employed percentage | 12.1 | % | ||
Return on capital employed is provided solely as a supplemental disclosure with respect to income generation because management believes it provides useful information with respect to earnings in a form that is comparable to the Company’s cost of capital employed, which includes both equity and debt securities.
* | Tax rate of 38% represents the Company’s target marginal tax rate compared with 2009’s effective income tax rate of 22.3%. | |
** | Tax rate of 38% represents the Company’s target marginal tax rate compared with 2008’s effective income tax rate of 13.9%. |