Annual report pursuant to Section 13 and 15(d)

LEASE OBLIGATIONS

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LEASE OBLIGATIONS
 12 Months Ended
Dec. 31, 2012
Leases [Abstract]  
LEASE OBLIGATIONS
NOTE 11 - LEASE OBLIGATIONS
We lease certain mining, production and other equipment under operating and capital leases. The leases are for varying lengths, generally at market interest rates and contain purchase and/or renewal options at the end of the terms. Our operating lease expense was $25.8 million, $26.3 million and $24.2 million respectively, for the years ended December 31, 2012, 2011 and 2010. Capital lease assets were $471.7 million and $406.0 million at December 31, 2012 and 2011, respectively. Corresponding accumulated amortization of capital leases included in respective allowances for depreciation were $184.5 million and $110.6 million at December 31, 2012 and 2011, respectively.
In October 2011, our North American Coal segment entered into the second phase of the sale-leaseback arrangement initially executed in December 2010 for the sale of the new longwall plow system at our Pinnacle mine in West Virginia. The first and second phases of the leaseback arrangement are for a period of five years. The 2010 sale-leaseback arrangement was specific to the assets at the time of the agreement and did not include the longwall plow system assets. Both phases of the leaseback arrangement have been accounted for as a capital lease. We recorded assets and liabilities under the capital lease of $75.9 million, reflecting the lower of the present value of the minimum lease payments or the fair value of the asset.
Future minimum payments under capital leases and non-cancellable operating leases at December 31, 2012 are as follows:
 
(In Millions)
 
Capital Leases
 
Operating Leases
2013
$
75.2

 
$
24.7

2014
69.0

 
20.9

2015
57.7

 
13.0

2016
42.1

 
8.0

2017
35.3

 
7.4

2018 and thereafter
92.4

 
21.5

Total minimum lease payments
$
371.7

 
$
95.5

Amounts representing interest
82.0

 
 
Present value of net minimum lease payments
$
289.7

(1)
 
                                         
(1)
The total is comprised of $54.1 million and $235.6 million classified as Other current liabilities and Other liabilities, respectively, in the Statements of Consolidated Financial Position at December 31, 2012.