2005 Financial Review

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION


LIQUIDITY AND CAPITAL RESOURCES

Summary of Cash Flow Information

                 
  Years Ended December 31,   $ change
(In millions)   2005 2004 2003     2005 2004
Cash flows from operating activities                
Continuing operations:                
Before changes in operating assets and liabilities $ 266.3 199.5 184.4   $ 66.8 15.1
Changes in assets and liabilities, including working capital   (6.5) 32.4 39.8     (38.9) (7.4)
Subtotal   259.8 231.9 224.2     27.9 7.7
Discontinued operations:                
BAX Global   54.2 52.8 60.3     1.4 (7.5)
Natural gas, timber and gold   - 0.2 19.2     (0.2) (19.0)
Operating activities   314.0 284.9 303.7     29.1 (18.8)
Cash flows from investing activities                
Continuing operations:                
Capital expenditures   (271.7) (194.9) (179.1)     (76.8) (15.8)
Net proceeds from:                
Disposal of former natural resource interests   5.0 28.6 119.4     (23.6) (90.8)
Notes receivable and settlement of royalty agreement   - - 26.0     - (26.0)
Subtotal of natural resource cash proceeds   5.0 28.6 145.4     (23.6) (116.8)
Contributions to VEBA (a)   - - (82.0)     - 82.0
Acquisitions   (53.2) (14.8) (7.2)     (38.4) (7.6)
Other   (2.5) 7.7 16.6     (10.2) (8.9)
Subtotal   (322.4) (173.4) (106.3)     (149.0) (67.1)
Discontinued operations:                
BAX Global   (72.8) (48.3) (47.1)     (24.5) (1.2)
Natural gas, timber and gold   - (0.8) (8.8)     0.8 8.0
Investing activities   (395.2) (222.5) (162.2)     (172.7) (60.3)
Cash flows before financing activities $ (81.2) 62.4 141.5   $ (143.6) (79.1)
(a)
In 2004, the VEBA was restricted to pay coal-related retiree medical benefits. As a result, the Company began to account for the VEBA as an offset to the postretirement obligation (see note 4 to the consolidated financial statements). Accordingly, $50 million of net cash contributions in 2004 have been classified within operating activities. In 2003, $82 million of contributions were classified within investing activities.