UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form 10-Q/A


(Amendment
No. 1)





(Mark
One)





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended March 31, 2009





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the transition period
from                    
to





Commission
File No. 001-32679








International
Coal Group, Inc.


(Exact
Name of Registrant as Specified in Its Charter)





Delaware
            
            20-2641185(State
      or Other Jurisdiction of
              Incorporation
      or Organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





300
      Corporate Centre Drive
              Scott
      Depot, West Virginia
            
            25560(Address
      of Principal Executive Offices)
            
            (Zip
      Code)





(304) 760-2400


(Registrant’s
Telephone Number, Including Area Code)





N/A


(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x   No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).   Yes   ̈      No   ̈


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
accelerated filer x  Accelerated
filer  ̈  Non-accelerated
filer  ̈  Smaller
reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈ No x





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
YEARS:





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes   ̈      No   ̈





APPLICABLE
ONLY TO CORPORATE ISSUERS:





Number
of shares of the Registrant’s Common Stock, $0.01 par value, outstanding as of
May 1, 2009—154,149,939.

















EXPLANATORY
NOTE





We
are filing this Form 10-Q/A Amendment No. 1 (this “Amendment”) to amend and
restate certain information that was included in our original Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2009 (the “First Quarter
2009 Form 10-Q”) as described below. For the convenience of the reader, this
Amendment sets forth the entire First Quarter 2009 Form 10-Q. However, this
Amendment amends and restates only Item 1 of Part I of the First Quarter 2009
Form 10-Q. The other Items are not being amended. Except as described in this
Explanatory Note, this Amendment does not modify or update the disclosures in
our First Quarter 2009 Form 10-Q. Therefore, this Amendment does not reflect any
other events that occurred after the original May 8, 2009 filing date of the
First Quarter 2009 Form 10-Q. Forward-looking statements in this Amendment have
also not been updated from the First Quarter 2009 Form 10-Q that we filed on May
8, 2009. For updated information, please see the reports that we have filed with
the SEC for subsequent periods. In addition, in connection with the filing of
this Amendment and pursuant to Rules 12b-15 and 13a-14 under the Exchange Act,
we are including with this Amendment currently dated
certifications.





Subsequent
to the issuance of our consolidated financial statements for the period ended
March 31, 2009, we identified an error in the application of Statement of
Financial Accounting Standards No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106 and 132(R), on our employee benefits liability. We had
not previously recorded the unfunded status of our black lung obligation as a
liability in our statement of financial position or recognized changes in the
funded status of the obligation in the year in which the changes occurred
through comprehensive income. As a result of this error, as of March 31, 2009,
we overstated our employee benefits liability by approximately $4.5 million and
accumulated other comprehensive loss by approximately $2.8 million and
understated our deferred tax liability by approximately $1.7 million. We do not
believe these errors are material to the consolidated financial statements. See
Note 15 accompanying our condensed consolidated financial statements for further
information regarding adjustment of the applicable financial statement line
items.








TABLE
OF CONTENTS





PagePART
      I—FINANCIAL INFORMATIONItem 1.
            
            Financial
      Statements
            
            3Item 2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            24Item 3.
            
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            37Item 4.
            
            Controls
      and Procedures
            
            37PART
      II—OTHER INFORMATIONItem 1.
            
            Legal
      Proceedings
            
            38Item 1A.
            
            Risk
      Factors
            
            39Item 2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            40Item 6.
            
            Exhibits
            
            41





2








PART I





Item 1.
            Financial
Statements





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


Condensed
Consolidated Balance Sheets (Unaudited)


(Dollars
in thousands, except per share amounts)






March
      31,
                2009
              
              
              December 31,
                2008ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
              
              $
              66,627
              
              
              $
              63,930Accounts
      receivable, net of allowances of $1,407 and $1,516
              
              
              95,728
              
              
              
              75,321Inventories,
      net
              
              
              67,242
              
              
              
              58,788Deferred
      income taxes
              
              
              16,958
              
              
              
              17,649Prepaid
      insurance
              
              
              8,957
              
              
              
              13,380Income
      taxes receivable
              
              
              11
              
              
              
              8,030Prepaid
      expenses and other
              
              
              11,228
              
              
              
              10,893Total
      current assets
              
              
              266,751
              
              
              
              247,991PROPERTY,
      PLANT, EQUIPMENT AND MINE DEVELOPMENT, net
              
              
              1,057,902
              
              
              
              1,069,297DEBT
      ISSUANCE COSTS, net
              
              
              10,310
              
              
              
              10,462ADVANCE
      ROYALTIES, net
              
              
              17,405
              
              
              
              17,462OTHER
      NON-CURRENT ASSETS
              
              
              5,483
              
              
              
              5,435Total
      assets
              
              $
              1,357,851
              
              
              $
              1,350,647LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
              
              $
              69,196
              
              
              $
              75,810Short-term
      debt
              
              
              3,026
              
              
              
              4,741Current
      portion of long-term debt and capital leases
              
              
              18,292
              
              
              
              15,319Current
      portion of reclamation and mine closure costs
              
              
              10,976
              
              
              
              11,139Current
      portion of employee benefits
              
              
              3,359
              
              
              
              3,359Accrued
      expenses and other
              
              
              87,234
              
              
              
              87,704Total
      current liabilities
              
              
              192,083
              
              
              
              198,072LONG-TERM
      DEBT AND CAPITAL LEASES
              
              
              424,671
              
              
              
              417,551RECLAMATION
      AND MINE CLOSURE COSTS
              
              
              68,398
              
              
              
              68,107EMPLOYEE
      BENEFITS
              
              
              59,235
              
              
              
              56,563DEFERRED
      INCOME TAXES
              
              
              51,566
              
              
              
              51,154BELOW-MARKET
      COAL SUPPLY AGREEMENTS
              
              
              41,139
              
              
              
              43,888OTHER
      NON-CURRENT LIABILITIES
              
              
              6,605
              
              
              
              6,195Total
      liabilities
              
              
              843,697
              
              
              
              841,530COMMITMENTS
      AND CONTINGENCIES
              
              
              —
              
              
              
              —STOCKHOLDERS’
      EQUITY:Preferred
      stock – par value $0.01, 200,000,000 shares authorized, none
      issued
              
              
              —
              
              
              
              —Common
      stock – par value $0.01, 2,000,000,000 shares authorized, 154,159,777 and
      154,155,009 shares issued and outstanding, respectively, as of March 31,
      2009 and 153,322,245 shares issued and outstanding, as of December 31,
      2008
              
              
              1,541
              
              
              
              1,533Treasury
      stock
              
              
              (8
              )
              
              
              —Additional
      paid-in capital
              
              
              658,329
              
              
              
              656,997Accumulated
      other comprehensive loss
              
              
              (2,294
              )
              
              
              (2,277
              )Retained
      deficit
              
              
              (143,478
              )
              
              
              (147,171
              )Total
      International Coal Group, Inc. stockholders’ equity
              
              
              514,090
              
              
              
              509,082Noncontrolling
      interest
              
              
              64
              
              
              
              35Total
      stockholders’ equity
              
              
              514,154
              
              
              
              509,117Total
      liabilities and stockholders’ equity
              
              $
              1,357,851
              
              
              $
              1,350,647





See
notes to condensed consolidated financial statements.


3





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Operations (Unaudited)


(Dollars
in thousands, except per share amounts)





Three
      months ended
              March 31,2009
            
            
            2008REVENUES:Coal
      sales revenues
            
            $
            273,816
            
            
            $
            226,604Freight
      and handling revenues
            
            
            8,634
            
            
            
            11,283Other
      revenues
            
            
            22,516
            
            
            
            14,038Total
      revenues
            
            
            304,966
            
            
            
            251,925COSTS
      AND EXPENSES:Cost
      of coal sales
            
            
            231,965
            
            
            
            208,804Freight
      and handling costs
            
            
            8,634
            
            
            
            11,283Cost
      of other revenues
            
            
            9,336
            
            
            
            8,935Depreciation,
      depletion and amortization
            
            
            26,263
            
            
            
            21,957Selling,
      general and administrative
            
            
            10,611
            
            
            
            8,526Gain
      on sale of assets, net
            
            
            (78
            )
            
            
            (211
            )Total
      costs and expenses
            
            
            286,731
            
            
            
            259,294Income
      (loss) from operations
            
            
            18,235
            
            
            
            (7,369
            )INTEREST
      EXPENSE, net
            
            
            (13,018
            )
            
            
            (12,571
            )Income
      (loss) before income taxes
            
            
            5,217
            
            
            
            (19,940
            )INCOME
      TAX (EXPENSE) BENEFIT
            
            
            (1,495
            )
            
            
            8,034Net
      income (loss)
            
            
            3,722
            
            
            
            (11,906
            )Net
      income attributable to noncontrolling interest
            
            
            (29
            )
            
            
            (7
            )Net
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            3,693
            
            
            $
            (11,913
            )Earnings
      per share:Basic
            
            $
            0.02
            
            
            $
            (0.08
            )Diluted
            
            $
            0.02
            
            
            $
            (0.08
            )Weighted-average
      common shares outstanding:Basic
            
            
            152,773,718
            
            
            
            152,448,665Diluted
            
            
            153,856,166
            
            
            
            152,448,665





See
notes to condensed consolidated financial statements.





4







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Cash Flows (Unaudited)


(Dollars
in thousands)





Three
      months ended
                March
      31,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
              
              $
              3,722
              
              
              $
              (11,906
              )Adjustments
      to reconcile net income (loss) to net cash from operating
      activities:Depreciation,
      depletion and amortization
              
              
              26,263
              
              
              
              21,957Amortization
      of deferred finance costs and debt discount
              
              
              1,664
              
              
              
              1,488Provision
      for bad debt
              
              
              (110
              )
              
              
              —Compensation
      expense on equity instruments
              
              
              1,340
              
              
              
              1,303Gain
      on sale of assets, net
              
              
              (78
              )
              
              
              (211
              )Deferred
      income taxes
              
              
              1,111
              
              
              
              (8,033
              )Amortization
      of accumulated employee benefit obligations
              
              
              (25
              )
              
              
              (130
              )Changes
      in assets and liabilities:Accounts
      receivable
              
              
              (20,297
              )
              
              
              (21,100
              )Inventories
              
              
              (8,454
              )
              
              
              (3,681
              )Prepaid
      expenses and other
              
              
              12,107
              
              
              
              2,881Other
      non-current assets
              
              
              124
              
              
              
              (2,471
              )Accounts
      payable
              
              
              (1,609
              )
              
              
              (1,281
              )Accrued
      expenses and other
              
              
              (470
              )
              
              
              3,688Reclamation
      and mine closure costs
              
              
              128
              
              
              
              (542
              )Other
      liabilities
              
              
              3,082
              
              
              
              57Net
      cash from operating activities
              
              
              18,498
              
              
              
              (17,981
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Proceeds
      from the sale of assets
              
              
              78
              
              
              
              99Additions
      to property, plant, equipment and mine development
              
              
              (18,815
              )
              
              
              (34,069
              )Withdrawals
      (deposits) of restricted cash
              
              
              (115
              )
              
              
              88Net
      cash from investing activities
              
              
              (18,852
              )
              
              
              (33,882
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayments
      on short-term debt
              
              
              (1,715
              )
              
              
              —Borrowings
      on long-term debt and capital leases
              
              
              9,085
              
              
              
              —Repayments
      on long-term debt and capital leases
              
              
              (3,800
              )
              
              
              (1,046
              )Purchases
      of treasury stock
              
              
              (8
              )
              
              
              —Debt
      issuance costs
              
              
              (511
              )
              
              
              (33
              )Net
      cash from financing activities
              
              
              3,051
              
              
              
              (1,079
              )NET
      CHANGE IN CASH AND CASH EQUIVALENTS
              
              
              2,697
              
              
              
              (52,942
              )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
              
              
              63,930
              
              
              
              107,150CASH
      AND CASH EQUIVALENTS, END OF PERIOD
              
              $
              66,627
              
              
              $
              54,208Supplemental
      information:Cash
      paid for interest (net of amount capitalized)
              
              $
              20,615
              
              
              $
              18,511Cash
      (paid) received for income taxes, net
              
              $
              8,186
              
              
              $
              (1
              )Supplemental
      disclosure of non-cash items:Purchases
      of property, plant, equipment and mine development through accounts
      payable
              
              $
              7,937
              
              
              $
              4,741Purchases
      of property, plant, equipment and mine development through financing
      arrangements
              
              $
              3,807
              
              
              $
              —





See
notes to condensed consolidated financial statements.





5








INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(1)
Basis of Presentation





The
accompanying interim condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and include the
accounts of International Coal Group, Inc. and its subsidiaries (the “Company”)
and its controlled affiliates. Significant intercompany transactions, profits
and balances have been eliminated in consolidation. The Company accounts for its
undivided interest in coalbed methane wells using the proportionate
consolidation method, whereby its share of assets, liabilities, revenues and
expenses are included in the appropriate classification in the financial
statements.





The
accompanying interim condensed consolidated financial statements as of March 31,
2009 and for the three months ended March 31, 2009 and 2008, and the notes
thereto, are unaudited. However, in the opinion of management, these financial
statements reflect all normal, recurring adjustments necessary for a fair
presentation of the results of the periods presented. The balance sheet
information as of December 31, 2008 has been derived from the Company’s
audited consolidated balance sheet. These statements should be read in
conjunction with the Company’s Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2008. The results of operations for the three months
ended March 31, 2009 are not necessarily indicative of the results to be
expected for future quarters or for the year ending December 31,
2009.





(2)
Summary of Significant Accounting Policies and General





Fair Value Measurements—In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurements
(“SFAS No. 157”). SFAS No. 157 clarifies the definition of fair value,
establishes a framework for measuring fair value and expands the disclosures on
fair value measurements. SFAS No. 157 is effective for fiscal years
beginning after November 15, 2007. Adoption of SFAS No. 157 did not
have a material impact on the Company’s financial position, results of
operations or cash flows; however, adoption did result in additional information
being included in the footnotes accompanying the Company’s consolidated
financial statements. See Note 9.





In
February 2008, the FASB issued FASB Staff Position (“FSP”) FAS No. 157-2,Effective Date of FASB Statement
No. 157 (“FSP FAS No. 157-2”). FSP FAS No. 157-2 permits delayed adoption
of SFAS No. 157 for certain non-financial assets and liabilities, which are not
recognized at fair value on a recurring basis, until fiscal years, and interim
periods within those fiscal years, beginning after November 15, 2008.
Adoption of FSP FAS No. 157-2 did not have a material impact on the Company’s
financial position, results of operations or cash flows.





In
October 2008, the FASB issued FSP FAS No. 157-3,Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active (“FSP FAS
No. 157-3”). FSP FAS No. 157-3 clarified the application of SFAS No. 157 in an
inactive market. It demonstrated how the fair value of a financial asset is
determined when the market for that financial asset is inactive. FSP FAS No.
157-3 was effective upon issuance, including prior periods for which financial
statements had not been issued. Adoption of FSP FAS No. 157-3 did not have a
material impact on the Company’s financial position, results of operations or
cash flows.





6





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





In
April 2009, the FASB issued FSP FAS No. 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS No.
157-4”). FSP FAS No. 157-4 provides additional guidance on estimating fair value
when the volume and level of activity for an asset or liability have
significantly decreased in relation to normal market activity for the asset or
liability. FSP FAS No. 157-4 also provides additional guidance on circumstances
that may indicate that a transaction is not orderly. FSP FAS No. 157-4 is
effective for interim and annual periods ending after June 15, 2009. The Company
does not believe that adoption of FSP FAS No. 157-4 will materially impact the
Company’s financial position, results of operations or cash flows.





Convertible Debt—In May 2008,
the FASB issued FSP APB 14-1,Accounting for Convertible Debt Instruments That May be Settled in Cash Upon
Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”). FSP APB
14-1 requires the liability and equity components of convertible debt
instruments that may be settled in cash upon conversion to be separately
accounted for in a manner that reflects the issuer’s nonconvertible debt
borrowing rate. To allocate the proceeds from a convertible debt offering in
this manner, a company would first need to determine the carrying amount of the
liability component, which would be based on the fair value of a similar
liability, excluding any embedded conversion options. The resulting debt
discount would be amortized over the period during which the debt is expected to
be outstanding as additional non-cash interest expense. FSP APB 14-1 was
effective for financial statements for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years, and has
been applied retrospectively for all periods presented. The Company has
determined its non-convertible borrowing rate would have been 11.7% at issuance.
The effect of adoption of FSP APB 14-1 was as follows:





Three
      months ended
              March
      31, 2008Consolidated
      Statement of Operations
            
            As
      Previously
              Reported
            
            
            Adjustment
            
            
            As
              AdjustedInterest expense,
      net
            
            $
            (11,981
            )
            
            $
            (590
            )
            
            $
            (12,571
            )Income
      tax benefit
            
            
            7,811
            
            
            
            223
            
            
            
            8,034Net
      loss attributable to International Coal Group, Inc.
            
            
            (11,546
            )
            
            
            (367
            )
            
            
            (11,913
            )





Three
      months ended
              March
      31, 2008Consolidated
      Statement of Cash Flows
            
            As
      Previously
              Reported
            
            Adjustment
            
            
            As
              AdjustedNet
      loss
            
            $
            (11,539
            )(1)
            $
            (367
            )
            
            $
            (11,906
            )Amortization
      of deferred finance costs and debt discount
            
            
            706
            
            
            782
            
            
            
            1,488Deferred
      income taxes
            
            
            (7,811
            )
            
            (222
            )
            
            
            (8,033
            )Additions
      to property, plant, equipment and mine development
            
            
            (33,876
            )
            
            (193
            )
            
            
            (34,069
            )





(1)
            Amount
      reflects immaterial adjustment of $7 related to the Company’s
      retrospective adoption of SFAS No.
160.





7





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





Business Combinations—In
December 2007, the FASB issued SFAS No. 141 (Revised 2007),Business Combinations (“SFAS
No. 141(R)”). SFAS No. 141(R) will significantly change the accounting
for business combinations. Under SFAS No. 141(R), an acquiring entity will
be required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited exceptions. SFAS
No. 141(R) will change the accounting treatment for certain specific
acquisition-related items including: (i) expensing acquisition-related
costs as incurred, (ii) valuing noncontrolling interests at fair value at
the acquisition date and (iii) expensing restructuring costs associated
with an acquired business. SFAS No. 141(R) also includes a substantial
number of new disclosure requirements. SFAS No. 141(R) is to be applied to
any business combination for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after
December 15, 2008. Adoption of SFAS No. 141(R) will impact the
accounting for the Company’s future business combinations, as well as for tax
uncertainties and valuation allowances from prior acquisitions.





Noncontrolling Interests—In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in
Consolidated Financial Statements (“SFAS No. 160”). SFAS
No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary
(minority interest) is an ownership interest in the consolidated entity that
should be reported as equity in the consolidated financial statements and
separate from the parent company’s equity. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the consolidated statement
of operations, of the amounts of consolidated net income attributable to the
parent and to the noncontrolling interest. SFAS No. 160 is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. Adoption of SFAS No. 160 impacted the
presentation of noncontrolling interest in the Company’s balance sheet and
statements of operations and cash flows. The impact of the changes in
presentation was not material.


Derivative Instruments—In March 2008, the FASB issued SFAS
No. 161,Disclosures
about Derivative Instruments and Hedging Activities – an amendment of FASB
Statement No. 133 (“SFAS No. 161”). SFAS No. 161 requires
additional disclosures for derivative instruments and hedging activities that
include how and why an entity uses derivatives, how these instruments and the
related hedged items are accounted for under FASB Statement No. 133,Accounting for Derivative
Instruments and Hedging Activities, and related interpretations and how
derivative instruments and related hedged items affect the entity’s financial
position, results of operations and cash flows. SFAS No. 161 is effective
for fiscal years, and interim periods within those fiscal years, beginning after
November 15, 2008. Adoption of SFAS No. 161 did not impact the
footnotes accompanying the Company’s consolidated financial
statements.





GAAP Hierarchy—In
May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted
Accounting Principles (“SFAS No. 162”). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles. SFAS No. 162 directs the hierarchy to the entity, rather than
the independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles. SFAS No. 162 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Adoption of SFAS No. 162 did not have a material impact
on the Company’s financial position, results of operations or cash
flows.





8





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





Share-Based Payments—In June
2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that all outstanding unvested
share-based payment awards that contain rights to nonforfeitable dividends
participate in undistributed earnings with common shareholders. Awards of this
nature are considered participating securities and the two-class method of
computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1
is effective for fiscal years beginning after December 15, 2008. Adoption of FSP
EITF 03-6-1 did not have a material impact on the Company’s financial position,
results of operations or cash flows.





Financial Instruments—In June
2008, the FASB ratified EITF 07-5,Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF
07-5”). EITF 07-5 provides that an entity should use a two step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument’s contingent
exercise and settlement provisions. It also clarifies the impact of foreign
currency denominated strike prices and market-based employee stock option
valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning after December 15, 2008. Adoption of EITF 07-5 did not have a material
impact on the Company’s financial position, results of operations or cash
flows.





Impairments—In April 2009, the
FASB issued FSP FAS No. 115-2 and FAS No. 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments (“FSP FAS No. 115-2 and FAS No. 124-2”).
FSP FAS No. 115-2 and FAS No. 124-2 modifies the other-than-temporary impairment
guidance for debt securities through increased consistency in the timing of
impairment recognition and enhanced disclosures related to the credit and
noncredit components of impaired debt securities that are not expected to be
sold. In addition, increased disclosures are required for both debt and equity
securities regarding expected cash flows, credit losses and an aging of
securities with unrealized losses. FSP FAS No. 115-2 and FAS No. 124-2 is
effective for interim and annual reporting periods that end after June 15, 2009.
The Company does not believe that adoption of FSP FAS No. 115-2 and FAS No.
124-2 will materially impact the Company’s financial position, results of
operations or cash flows.





Fair Value Instruments—In
April 2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments (“FSP FAS No. 107-1 and APB 28-1”). FSP FAS No.
107-1 and APB 28-1 requires fair value disclosures for financial instruments
that are not reflected in the condensed consolidated balance sheets at fair
value to be disclosed on a quarterly basis, providing quantitative and
qualitative information about fair value estimates. FSP FAS No. 107-1 and APB
28-1 is effective for interim reporting periods ending after June 15, 2009. The
Company does not believe that adoption of FSP FAS No. 107-1 and APB 28-1 will
materially impact the Company’s financial position, results of operations or
cash flows.





(3) Inventories





Inventories
consisted of the following:





March
      31,
              2009
            
            
            December 31,
              2008Coal
            
            $
            34,797
            
            
            $
            28,436Parts
      and supplies
            
            
            34,344
            
            
            
            32,159Reserve
      for obsolescence–parts and supplies
            
            
            (1,899
            )
            
            
            (1,807
            )Total
            
            $
            67,242
            
            
            $
            58,788





9





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(4) Property,
Plant, Equipment and Mine Development





Property,
plant, equipment and mine development are summarized by major classification as
follows:





March
      31,
              2009
            
            
            December 31,
              2008Coal
      lands and mineral rights
            
            $
            586,512
            
            
            $
            586,512Plant
      and equipment
            
            
            583,339
            
            
            
            571,083Mine
      development
            
            
            185,176
            
            
            
            181,876Land
      and land improvements
            
            
            24,361
            
            
            
            24,119Coalbed
      methane well development costs
            
            
            14,889
            
            
            
            14,8891,394,277
            
            
            
            1,378,479Less
      accumulated depreciation, depletion and amortization
            
            
            (336,375
            )
            
            
            (309,182
            )Net
      property, plant, equipment and mine development
            
            $
            1,057,902
            
            
            $
            1,069,297





Depreciation,
depletion and amortization expense related to property, plant, equipment and
mine development for the three months ended March 31, 2009 and 2008 was $29,011
and $26,478, respectively.





(5)
Debt





Long-Term
Debt and Capital Leases





Long-term
debt and capital leases consisted of the following:





March
      31,
              2009
            
            
            December 31,
              20089.00%
      Convertible Senior Notes, due 2012, net of debt discount of $16,367 and
      $17,369, respectively
            
            $
            208,633
            
            
            $
            207,63110.25%
      Senior Notes, due 2014
            
            
            175,000
            
            
            
            175,000Equipment
      notes
            
            
            53,300
            
            
            
            43,378Capital
      leases and other
            
            
            6,030
            
            
            
            6,861Total
            
            
            442,963
            
            
            
            432,870Less
      current portion
            
            
            (18,292
            )
            
            
            (15,319
            )Long-term
      debt and capital leases
            
            $
            424,671
            
            
            $
            417,551





Convertible senior notes—In
2007, the Company completed a private offering of $225,000 aggregate principal
amount of 9.00% Convertible Senior Notes (the “Convertible Notes”) due 2012. The
Convertible Notes are the Company’s senior unsecured obligations and are
guaranteed on a senior unsecured basis by the Company’s material current and
future domestic subsidiaries. The Convertible Notes and the related guarantees
rank equal in right of payment to all of the Company’s and the guarantors’
respective existing and future unsecured senior indebtedness. Interest is
payable semi-annually in arrears on February 1 and August 1 of each
year. The Company assesses the convertibility of the Convertible Notes on an
ongoing basis. The Convertible Notes were not convertible as of March 31,
2009.





10







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





The
principal amount of the Convertible Notes is payable in cash and amounts above
the principal amount, if any, will be convertible into shares of the Company’s
common stock or, at the Company’s option, cash. The Convertible Notes are
convertible at an initial conversion price, subject to adjustment, of $6.10 per
share (approximating 163.8136 shares per one thousand dollar principal amount of
the Convertible Notes). The volume weighted-average price of the Company’s stock
subsequent to the expiration date of the conversion period was below $6.10 per
share. Accordingly, there were no potentially convertible shares at March 31,
2009. The Convertible Notes are convertible upon the occurrence of certain
events, including (i) prior to February 12, 2012 during any calendar
quarter after September 30, 2007, if the closing sale price per share of
the Company’s common stock for each of 20 or more trading days in a period of 30
consecutive trading days ending on the last trading day of the immediately
preceding calendar quarter exceeds 130% of the conversion price in effect on the
last trading day of the immediately preceding calendar quarter; (ii) prior
to February 12, 2012 during the five consecutive business days immediately
after any five consecutive trading day period in which the average trading price
for the notes on each day during such five trading-day period was equal to or
less than 97% of the closing sale price of the Company’s common stock on such
day multiplied by the then current conversion rate; (iii) upon the
occurrence of specified corporate transactions; and (iv) at any time from,
and including February 1, 2012 until the close of business on the second
business day immediately preceding August 1, 2012. In addition, upon events
defined as a “fundamental change” under the Convertible Notes indenture, the
Company may be required to repurchase the Convertible Notes at a repurchase
price in cash equal to 100% of the principal amount of the notes to be
repurchased, plus any accrued and unpaid interest to, but excluding, the
fundamental change repurchase date. As such, in the event of a fundamental
change or the aforementioned average pricing thresholds are met, the Company
would be required to classify the entire amount outstanding of the Convertible
Notes as a current liability in the following quarter. In the event that a
significant number of the holders of the Convertible Notes were to convert their
notes prior to maturity, the Company may not have enough available funds at any
particular time to make the required repayments. Under these circumstances, the
Company would look to WL Ross & Co. LLC (“WLR”), its banking group and other
potential lenders to obtain short-term funding until such time that it could
secure necessary financing on a long-term basis. The availability of any such
financing would depend upon the circumstances at the time, including the terms
of any such financing, and other factors. In addition, if conversion occurs in
connection with certain changes in control, the Company may be required to
deliver additional shares of the Company’s common stock (a “make whole” premium)
by increasing the conversion rate with respect to such notes. For a
discussion of the effects of the Convertible Notes on earnings per share, see
Note 10.





Effective
January 1, 2009, the Company adopted FSP APB 14-1 (see Note 2). FSP APB 14-1
requires disclosure of the carrying amount of the equity component of the
related convertible debt, as well as the interest expense resulting from
amortization of the debt discount and interest expense recognized on the
principal amount of the debt. As of March 31, 2009 and 2008, the equity
component of the convertible debt was $13,517 and is included in additional
paid-in capital. For the three months ended March 31, 2009 and 2008 interest
expense resulting from amortization of the debt discount was $1,002 and $893,
respectively. For both the three months ended March 31, 2009 and 2008, interest
expense on the principal amount of the Convertible Notes was
$5,063.








11





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





Credit facility—The Company is
party to a $100,000 revolving credit facility (the “Credit Facility”) which
matures on June 23, 2011. A maximum of $80,000 may be used for letters of
credit. In February 2009, the Company executed an amendment to the Credit
Facility that affected certain 2009 debt covenants. The amendment modified the
maximum permitted leverage and minimum interest coverage ratios. The amendment
also decreased the maximum capital spending and added a minimum liquidity
requirement. Debt covenants for years subsequent to 2009 were not affected by
the amendment. As of March 31, 2009, the Company had no borrowings outstanding
and letters of credit totaling $73,551 outstanding, leaving $26,449 available
for future borrowing capacity. Interest on the borrowings under the Credit
Facility is payable, at the Company’s option, at either the base rate plus an
applicable margin of 2.25% to 3.00% based on the Company’s leverage ratio as of
March 31, 2009 or LIBOR plus an applicable margin of 3.25% to 4.00% based
on the Company’s leverage ratio as of March 31, 2009. As of March 31, 2009, the
Company was in compliance with its financial covenants under the Credit
Facility.





Equipment notes—The equipment
notes, having various maturity dates extending to February 2014, are
collateralized by mining equipment. As of March 31, 2009, the Company had
amounts outstanding with terms ranging from 36 to 60 months and a
weighted-average interest rate of 7.21%. At March 31, 2009, additional funds are
available under the Company’s revolving equipment credit facility for terms
ranging from 36 to 60 months with a current interest rate of 8.25%.





Capital leases and other—The
Company leases certain mining equipment under capital lease. The Company imputed
interest on its capital lease using a rate of 10.44% in order to reduce the net
minimum lease payments to their present values. Additionally, the Company
finances certain of its annual insurance premiums at a current interest rate of
5.42%.





Short-Term
Debt





The
Company finances the majority of its insurance premiums, a portion of which is
included in short-term debt. The weighted-average interest rate applicable to
the notes was 4.75%. As of March 31, 2009 and December 31, 2008, the Company had
$3,026 and $4,741, respectively, outstanding related to the financing of
insurance premiums.





(6)
Income Taxes





The
effective income tax rate for the three months ended March 31, 2009 was
calculated using an estimated annual effective rate based on projected earnings
for the year. The effective income tax rate for the three months ended March 31,
2009 decreased to 29% from 40% for the three months ended March 31, 2008. The
decrease was primarily a result of the effect of income tax deductions for
depletion of mineral rights on projected earnings offset by an increase
in other non-deductible expenses and miscellaneous items.





12







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(7)
Employee Stock Awards





The
Company’s 2005 Equity and Performance Incentive Plan (the “Plan”) permits the
granting of stock options, restricted shares, stock appreciation rights,
restricted share units, performance shares or performance units to its employees
for up to 8,000,000 shares of common stock. Option awards are generally granted
with an exercise price equal to the market price of the Company’s stock at the
date of grant and have 10-year contractual terms. The option and restricted
stock awards generally vest in equal annual installments of 25% over a four-year
period. The Company recognizes expense related to the awards on a straight-line
basis over the vesting period. The Company issues new shares or uses shares held
in treasury upon the exercise of option awards.





The
Black-Scholes option pricing model was used to calculate the estimated fair
value of the options granted. The estimated grant date fair value of the options
granted during the three months ended March 31, 2009 and 2008 was calculated
using the following assumptions:





March
      31,2009
            
            
            2008Expected
      term (in years)
            
            
            5
            
            
            
            5Weighted-average
      expected volatility
            
            
            50.8
            %
            
            
            43.0
            %Risk-free
      rate
            
            
            1.4%
      – 1.9
            %
            
            
            2.7%
      – 3.2
            %Expected
      dividends
            
            
            —
            
            
            
            —





The
Company estimated forfeiture rates of 4.50% and 3.25% at March 31, 2009 and
2008, respectively.





Due
to the Company’s limited operating history, the expected lives and volatility
are estimated based on other companies in the coal industry. The risk-free
interest rates are based on the rates of zero coupon U.S. Treasury bonds with
similar maturities on the date of grant. The estimated forfeiture rates were
determined based on historical turnover of the Company’s employees eligible
under the plan.





Stock-based
employee compensation expense of $834 and $782, net of tax of $506 and $521,
related to the issuance of all stock-based awards outstanding was included in
earnings for the three months ended March 31, 2009 and 2008,
respectively.





A
summary of the Company’s outstanding options as of March 31, 2009, and changes
during the three months ended March 31, 2009, is as follows:





Options
            
            Shares
            
            
            Weighted-
              Average
              Exercise
              Price
            
            
            Weighted-
              Average
              Remaining
              Contractual
              Term
              (years)
            
            
            Aggregate
              Intrinsic
              ValueOutstanding
      at January 1, 2009
            
            
            2,831,192
            
            
            $
            7.88Granted
            
            
            2,307,556
            
            
            
            1.53Forfeited
            
            
            (10,975
            )
            
            
            7.17Expired
            
            
            (13,900
            )
            
            
            8.78Outstanding
      at March 31, 2009
            
            
            5,113,873
            
            
            
            5.01
            
            
            
            8.69
            
            
            $
            206Vested or expected to vest at March
      31, 2009
            
            
            4,797,819
            
            
            
            5.11
            
            
            
            8.65
            
            
            $
            188Exercisable
      at March 31, 2009
            
            
            1,459,187
            
            
            
            8.98
            
            
            
            6.97
            
            
            $
            —





13







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





The
weighted-average grant-date fair value of options granted during the three
months ended March 31, 2009 and 2008 was $0.73 and $2.46, respectively. There
were no options exercised during the three months ended March 31, 2009 and
2008.





A
summary of the status of the Company’s nonvested restricted stock awards as of
March 31, 2009, and changes during the three months ended March 31, 2009, is as
follows:





Nonvested
      Shares
            
            Shares
            
            
            Weighted-
              Average Grant-Date
              Fair
      ValueNonvested
      at January 1, 2009
            
            
            556,344
            
            
            $
            7.00Granted
            
            
            837,697
            
            
            
            1.53Vested
            
            
            (41,867
            )
            
            
            6.38Forfeited
            
            
            (5,600
            )
            
            
            7.47Nonvested
      at March 31, 2009
            
            
            1,346,574
            
            
            
            3.62





The
weighted-average grant-date fair value of restricted stock granted during the
three months ended March 31, 2009 and 2008 was $1.53 and $6.01, respectively.
The total fair value of restricted stock vested during the three months ended
March 31, 2009 and 2008 was $267 and $1,086, respectively.





As
of March 31, 2009, there was $7,929 of unrecognized compensation cost related to
nonvested stock-based awards that is expected to be recognized over a
weighted-average period of 2.9 years.





The
Plan provides recipients the ability to satisfy tax obligations upon vesting of
shares of restricted stock by having the Company withhold a portion of the
shares otherwise deliverable to the recipients. During the three months ended
March 31, 2009, the Company withheld 4,768 shares of common stock from employees
in connection with tax withholding obligations. The value of the common stock
that was withheld was based upon the closing price of the common stock on the
applicable vesting dates. Such shares were included in treasury stock in the
Company’s condensed consolidated balance sheet.





In
December 2008, the Company’s Board of Directors (the “Board”) approved an annual
restricted share unit grant with a grant date value equal to $50 for each member
of the Board to be granted at the same time as the annual equity awards granted
to executive officers. Each restricted share unit represents a contingent right
to receive one share of issuer common stock upon the six-month anniversary of
the date on which the director ceases to provide services, subject to certain
provisions. The number of shares issuable is calculated by dividing $50 by the
closing stock price of the Company’s common stock on the New York Stock Exchange
on the grant date. Each non-employee director was issued 32,895 restricted share
units on March 3, 2009. The weighted-average grant-date fair value of restricted
share units granted during the three months ended March 31, 2009 was $1.52. The
total fair value of restricted share units vested during the three months ended
March 31, 2009 was $350. There were no restricted share units granted during the
three months ended March 31, 2008.





14







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(8)
Employee Benefits





Postretirement
Benefits





The
following table details the components of the net periodic benefit cost for
postretirement benefits other than pensions for the three months ended March 31,
2009 and 2008.





Three months ended
              March
      31,2009
            
            
            2008Net
      periodic benefit cost:Service
      cost
            
            $
            834
            
            
            $
            652Interest
      cost
            
            
            436
            
            
            
            407Amortization
      of actuarial loss
            
            
            73
            
            
            
            107Benefit
      cost
            
            $
            1,343
            
            
            $
            1,166





The
plan is unfunded, therefore, no contributions were made by the Company for the
three months ended March 31, 2009 and 2008.





Black
Lung Benefits





The
following table details the components of the net periodic benefit cost for
black lung benefits for the three months ended March 31, 2009 and
2008.





Three months ended
              March
      31,2009
            
            
            2008Net
      periodic benefit cost:Service
      cost
            
            $
            693
            
            
            $
            511Interest
      cost
            
            
            394
            
            
            
            403Amortization
      of actuarial gain
            
            
            (98
            )
            
            
            (237
            )Benefit
      cost
            
            $
            989
            
            
            $
            677





The
plan is unfunded, therefore, no contributions were made by the Company for the
three months ended March 31, 2009 and 2008.





15








INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(9)
Fair Value Measurements





Effective
January 1, 2008, the Company adopted SFAS No. 157, which clarifies the
definition of fair value, establishes a framework for measuring fair value and
expands the disclosures on fair value measurements. SFAS No. 157 applies
whenever other statements require or permit assets or liabilities to be measured
at fair value. SFAS No. 157 establishes the following fair value hierarchy
that prioritizes the inputs used to measure fair value:





•
            Level
      1 –
            Unadjusted
      quoted prices for identical assets or liabilities in active
      markets.•
            Level
      2 –
            Inputs
      other than Level 1 that are based on observable market data, either
      directly or indirectly. These include quoted prices for similar assets or
      liabilities in active markets, quoted prices for identical assets or
      liabilities in inactive markets, inputs that are observable that are not
      prices and inputs that are derived from or corroborated by observable
      markets.•
            Level
      3 –
            Developed
      from unobservable data, reflecting an entity’s own
      assumptions.





The
Company entered into an Interest Rate Collar Agreement (the “Collar”) that
expired and was settled on March 31, 2009. The interest rate collar was
designed as a cash flow hedge to offset the impact of changes in the LIBOR
interest rate above 5.92% and below 4.80%. The value of the interest rate collar
was based on a forward LIBOR curve, which was observable at commonly quoted
intervals for the full term of the agreement. The Company recognized the change
in the fair value of this agreement in the period of change. For the three
months ended March 31, 2009 and 2008, the Company recorded losses of $6 and
$2,725, respectively, related to the change in fair value. The loss is included
in interest expense in the Company’s consolidated statement of
operations.








The
following table presents the fair value hierarchy for financial liabilities
measured at fair value on a recurring basis:





Fair Value Measurements Using:Interest
      Rate Collar Agreement, as of:
            
            Total
            
            Quoted Prices
              in
      Active
              Markets
      for
              Identical
              Assets
              (Level 1)
            
            Significant
              Other
              Observable
              Inputs
              (Level 2)
            
            Significant
              Unobservable
              Inputs
              (Level 3)March
      31, 2009
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —December
      31, 2008
            
            
            1,665
            
            
            —
            
            
            1,665
            
            
            —





16





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(10)
Earnings Per Share





Basic
earnings per share is computed by dividing net income available to common
shareholders by the weighted-average number of common shares outstanding during
the period, excluding restricted common stock subject to continuing vesting
requirements. Diluted earnings per share is calculated based on the
weighted-average number of common shares outstanding during the period and, when
dilutive, potential common shares from the exercise of stock options, restricted
common stock subject to continuing vesting requirements, restricted stock units
and convertible debt, pursuant to the treasury stock method.





Reconciliations
of weighted-average shares outstanding used to compute basic and diluted
earnings per share for the three months ended March 31, 2009 and 2008 are as
follows:





Three
      months ended
              March
      31,2009
            
            
            2008Net
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            3,693
            
            
            $
            (11,913
            )Weighted-average
      common shares outstanding—basic
            
            
            152,773,718
            
            
            
            152,448,665Incremental
      shares arising from stock options
            
            
            —
            
            
            
            —Incremental
      shares arising from restricted shares
            
            
            1,082,448
            
            
            
            —Incremental
      shares arising from restricted stock units
            
            
            —
            
            
            
            —Incremental
      shares arising from convertible notes
            
            
            —
            
            
            
            —Weighted-average
      common shares outstanding—diluted
            
            
            153,856,166
            
            
            
            152,448,665Earnings
      Per Share:Basic
            
            $
            0.02
            
            
            $
            (0.08
            )Diluted
            
            $
            0.02
            
            
            $
            (0.08
            )





Options
to purchase 2,818,317 shares of common stock outstanding at March 31, 2009 have
been excluded from the computation of diluted earnings per share for the three
months then ended because their effect would have been anti-dilutive. Options to
purchase 2,843,262 shares of common stock and 696,445 shares of restricted
common stock outstanding at March 31, 2008 have been excluded from the
computation of diluted earnings per share for the three months then ended
because their effect would have been anti-dilutive.





The
principal amount of the Convertible Notes is payable in cash and amounts above
the principal amount, if any, will be convertible into shares of the Company’s
common stock or, at the Company’s option, cash. The volume weighted-average
price of the Company’s stock subsequent to the expiration date of the conversion
periods was below $6.10 per share. Accordingly, there were no potentially
dilutive shares at March 31, 2009 or 2008.





17





INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(11)
Commitments and Contingencies





Guarantees and
Financial Instruments with Off-balance Sheet Risk—In the normal course of
business, the Company is a party to certain guarantees and financial instruments
with off-balance sheet risk, such as bank letters of credit and performance or
surety bonds. No liabilities related to these arrangements are reflected in the
Company’s condensed consolidated balance sheets. Management does not expect any
material losses to result from these guarantees or off-balance sheet financial
instruments. The Company has outstanding surety bonds with third parties
totaling approximately $120,324 as of March 31, 2009 to secure reclamation and
other performance commitments. As of March 31, 2009, the Company has bank
letters of credit outstanding of $73,551 under its revolving credit
facility.





Legal
Matters—On August 23, 2006, a survivor of the Sago mine accident,
Randal McCloy, filed a complaint in the Kanawha Circuit Court in Kanawha County,
West Virginia. The claims brought by Randal McCloy and his family against the
Company and certain of its subsidiaries, and against W.L. Ross & Co.,
and Wilbur L. Ross, Jr., individually, were dismissed on February 14, 2008,
after the parties reached a confidential settlement. Sixteen other complaints
have been filed in Kanawha Circuit Court by the representatives of many of the
miners who died in the Sago mine accident, and several of these plaintiffs have
filed amended complaints to expand the group of defendants in the cases. The
complaints allege various causes of action against the Company and its
subsidiary, Wolf Run Mining Company, one of its shareholders, W.L.
Ross & Co., and Wilbur L. Ross Jr., individually, related to the
accident and seek compensatory and punitive damages. In addition, the plaintiffs
also allege causes of action against other third parties, including claims
against the manufacturer of Omega block seals used to seal the area where the
explosion occurred and against the manufacturer of self-contained self-rescuer
(“SCSR”) devices worn by the miners at the Sago mine. Some of these third
parties have been dismissed from the actions upon settlement. The amended
complaints add other of the Company’s subsidiaries to the cases, including ICG,
Inc., ICG, LLC and Hunter Ridge Coal Company, unnamed parent, subsidiary and
affiliate companies of the Company, W.L. Ross & Co., and Wilbur L. Ross
Jr., and other third parties, including a provider of electrical services and a
supplier of components used in the SCSR devices. The Company believes that it is
appropriately insured for these and other potential claims, and has fully paid
its deductible applicable to its insurance policies. In addition to the
dismissal of the McCloy claim, the Company has settled and dismissed five other
actions. These settlements required the release of the Company, its
subsidiaries, W.L. Ross & Co., and Wilbur L. Ross, Jr. Some of the
plaintiffs involved in one of the dismissed actions have sought permission from
the Supreme Court of Appeals of West Virginia to appeal the settlement, alleging
that the settlement negotiated by the decedent’s estate should not have been
approved by the trial court. The trial court overruled those plaintiffs’
objections to the settlement, and, although the West Virginia Supreme Court of
Appeals refused to stay the effectiveness of the settlement, the plaintiffs’
petition for appeal to the West Virginia Supreme Court of Appeals was recently
presented to the court. The court has deferred its decision as to whether it
will hear the appeal, pending its ruling on an unrelated case that shares
similar issues. The Company will vigorously defend itself against the remaining
complaints and any appeal of any prior settlements.





18








INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





Allegheny
Energy Supply (“Allegheny”), the sole customer of coal produced at the Company’s
subsidiary Wolf Run Mining Company’s (“Wolf Run”) Sycamore No. 2 mine,
filed a lawsuit against Wolf Run, Hunter Ridge Holdings, Inc. (“Hunter Ridge”),
and the Company in state court in Allegheny County, Pennsylvania on
December 28, 2006, and amended its complaint on April 23, 2007.
Allegheny claims that the Company breached a coal supply contract when it
declared force majeure under the contract upon idling the Sycamore No. 2
mine in the third quarter of 2006. The Sycamore No. 2 mine was idled after
encountering adverse geologic conditions and abandoned gas wells that were
previously unidentified and unmapped. The amended complaint also alleges that
the production stoppages constitute a breach of the guarantee agreement by
Hunter Ridge and breach of certain representations made upon entering into the
contract in early 2005, a claim that Allegheny has since voluntarily dropped.
Allegheny claims that it will incur costs in excess of $100,000 to purchase
replacement coal over the life of the contract. The Company, Wolf Run and Hunter
Ridge answered the amended complaint on August 13, 2007, disputing all of the
remaining claims. On November 3, 2008, the Company, Wolf Run and
Hunter Ridge filed an amended answer and counterclaim against the
plaintiffs seeking to void the coal supply agreement due to, among other things,
fraudulent inducement and conspiracy. The counterclaim alleges further that
Allegheny breached a confidentiality agreement with Hunter Ridge, which
prohibited the solicitation of its employees. After the coal supply agreement
was executed, Allegheny hired the then-president of Anker Coal Group, Inc. (now
Hunter Ridge) who engaged in negotiations on behalf of Wolf Run and Hunter
Ridge. In addition to seeking a declaratory judgment that the coal supply
agreement and guaranty be deemed void and unenforceable and rescission of the
contracts, the counterclaim also seeks compensatory and punitive
damages.





On
December 6, 2007, the Kentucky Waterways Alliance, Inc., and The Sierra
Club sued the U.S. Army Corps of Engineers (the “ACOE”) in the United States
District Court for the Western District of Kentucky, Louisville Division,
asserting that a permit to construct five valley fills was issued unlawfully to
the Company’s Hazard subsidiary for its Thunder Ridge Surface mine. The suit
alleges that the ACOE failed to comply with the requirements of both
Section 404 of the Clean Water Act and the National Environmental Policy
Act. Hazard intervened in the suit to protect the Company’s interests. The ACOE
suspended the Section 404 permit on December 26, 2007 in order to
evaluate the issues raised by the plaintiffs. The ACOE completed its evaluation
on March 25, 2009. Only a day prior, the U.S. Environmental Protection Agency
(the “EPA”) stated its intention to more closely scrutinize Section 404
permitting decisions by the ACOE. On March 27, 2009, the ACOE reinstated
Hazard’s permit. Pursuant to earlier agreements with the plaintiffs in the
litigation, the Company provided thirty (30) days notice to plaintiffs’ counsel
of Hazard’s intent to proceed with activities authorized under the permit. After
such notice, the plaintiffs have agreed to amend the earlier agreement to allow
Hazard partial use of the reinstated permit, including construction of an
additional valley fill, thus delaying the plaintiffs’ move to seek a temporary
restraining order and subsequent injunction to block Hazard’s use of the permit.
If the court ultimately finds that the permit is unlawful, production could be
materially affected at the Thunder Ridge Surface mine. The EPA’s heightened
scrutiny will likely render the process of obtaining ACOE permits for coal
mining activities in Appalachia more difficult.





On
January 7, 2008, Saratoga Advantage Trust filed a class action lawsuit in
the U.S. District Court for the Southern District of West Virginia against the
Company and certain of its officers and directors. The complaint asserts claims
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and
Rule 10b-5 promulgated thereunder, based on alleged false and misleading
statements in the registration statements filed in connection with the Company’s
November 2005 reorganization and December 2005 public offering of common stock.
In addition, the complaint challenges other of the Company’s public statements
regarding its operating condition and safety record. The Company intends to
vigorously defend the action.





19








INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





On
July 3, 2007, Taylor Environmental Advocacy Membership, Inc. (“T.E.A.M.”) filed
a petition to appeal the issuance of ICG Tygart Valley, LLC’s (“Tygart Valley”)
Surface Mine Permit U-2004-06 against the West Virginia Department of
Environmental Protection (the “WVDEP”) in an action before the West Virginia
Surface Mine Board (the “Board”). On December 10, 2007, the Board remanded the
permit to the WVDEP for revision to certain provisions related to pre-mining
water monitoring and cumulative hydrologic impacts. The WVDEP issued a
modification on April 1, 2008 addressing those issues. T.E.A.M. filed an appeal
of the WVDEP’s approval of the permit modification on April 30, 2008. On October
7, 2008, the Board issued an order remanding the permit to the WVDEP requiring
Tygart Valley to address a technical issue related to projected post-mining
water quality. Tygart Valley has prepared and submitted a permit modification to
alleviate the Board’s concerns. All site development has been suspended until
the WVDEP has approved the permit modification. If the WVDEP issues the
permit as modified, there will be additional opportunity for appeal by
T.E.A.M.





In
addition, from time to time, the Company is involved in legal proceedings
arising in the ordinary course of business. These proceedings include
assessments of penalties for citations and orders asserted by MSHA and other
regulatory agencies, none of which are expected by management to, individually
or in the aggregate, have a material adverse effect on the Company. In the
opinion of management, the Company has recorded adequate reserves for
liabilities arising in the ordinary course and it is management’s belief there
is no individual case or group of related cases pending that is likely to have a
material adverse effect on the Company’s financial condition, results of
operations or cash flows.





(12)
Related Party Transactions and Balances





Under
an Advisory Services Agreement dated as of October 1, 2004 between the
Company and WLR, WLR has agreed to provide advisory services to the Company
(consisting of consulting and advisory services in connection with strategic and
financial planning, investment management and administration and other matters
relating to the business and operation of the Company of a type customarily
provided by sponsors of U.S. private equity firms to companies in which they
have substantial investments, including any consulting or advisory services
which the Board of Directors reasonably requests). WLR is paid a quarterly fee
of $500 and reimbursed for any reasonable out-of-pocket expenses (including
expenses of third-party advisors retained by WLR). The agreement is for a period
of seven years; however, it may be terminated upon the occurrence of certain
events.





(13)
Segment Information





The
Company extracts, processes and markets steam and metallurgical coal from deep
and surface mines for sale to electric utilities and industrial customers,
primarily in the eastern United States. The Company operates only in the United
States with mines in the Central Appalachian, Northern Appalachian and
Illinois Basin regions. The Company has three reportable business segments:
Central Appalachian, Northern Appalachian and Illinois Basin. The Company’s
Central Appalachian operations are located in southern West Virginia, eastern
Kentucky and western Virginia and include eight mining complexes. The Company’s
Northern Appalachian operations are located in northern West Virginia and
Maryland and include four mining complexes. The Company’s Illinois Basin
operations include one mining complex. The Company also has an Ancillary
category, which includes the Company’s brokered coal functions, corporate
overhead, contract highwall mining services and land activities.





20














INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





Reportable
segment results from continuing operations for the three months ended March 31,
2009 and 2008 and segment assets as of March 31, 2009 and 2008 were as
follows:





Three
months ended March 31, 2009:





Central
              Appalachian
            
            
            Northern
              Appalachian
            
            
            Illinois
              Basin
            
            
            Ancillary
            
            
            ConsolidatedRevenue
            
            $
            189,562
            
            
            $
            66,167
            
            
            $
            21,005
            
            
            $
            28,232
            
            
            $
            304,966Adjusted
      EBITDA
            
            
            29,433
            
            
            
            10,152
            
            
            
            2,871
            
            
            
            2,042
            
            
            
            44,498Depreciation,
      depletion and amortization
            
            
            17,590
            
            
            
            5,575
            
            
            
            1,710
            
            
            
            1,388
            
            
            
            26,263Capital
      expenditures
            
            
            9,200
            
            
            
            5,191
            
            
            
            1,256
            
            
            
            1,970
            
            
            
            17,617Total
      assets
            
            
            758,610
            
            
            
            186,590
            
            
            
            41,104
            
            
            
            371,547
            
            
            
            1,357,851





Three
months ended March 31, 2008:





Central
              Appalachian
            
            
            Northern
              Appalachian
            
            
            Illinois
              Basin
            
            
            Ancillary
            
            
            ConsolidatedRevenue
            
            $
            155,070
            
            
            $
            50,689
            
            
            $
            20,640
            
            
            $
            25,526
            
            
            $
            251,925Adjusted
      EBITDA
            
            
            15,578
            
            
            
            1,795
            
            
            
            2,348
            
            
            
            (5,133
            )
            
            
            14,588Depreciation,
      depletion and amortization
            
            
            15,846
            
            
            
            2,127
            
            
            
            1,813
            
            
            
            2,171
            
            
            
            21,957Capital
      expenditures
            
            
            15,577
            
            
            
            12,318
            
            
            
            405
            
            
            
            1,244
            
            
            
            29,544Total
      assets
            
            
            670,470
            
            
            
            175,182
            
            
            
            34,815
            
            
            
            398,602
            
            
            
            1,279,069Goodwill
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            30,237
            
            
            
            30,237





Revenue
in the Ancillary category consists primarily of $10,720 and $16,697 relating to
the Company’s brokered coal sales and $6,840 and $4,061 relating to contract
highwall mining activities for the three months ended March 31, 2009 and 2008,
respectively. Capital expenditures include non-cash amounts of $11,744 for the
three months ended March 31, 2009. Capital expenditures do not include $12,942
and $4,525 paid during the three months ended March 31, 2009 and 2008,
respectively, related to capital expenditures accrued in prior
periods.





Adjusted
EBITDA represents earnings before deducting interest expense, income taxes,
depreciation, depletion, amortization and noncontrolling interest. Adjusted
EBITDA is presented because it is an important supplemental measure of the
Company’s performance used by the Company’s chief operating decision
maker.





Reconciliation
of net income (loss) attributable to International Coal Group, Inc. to Adjusted
EBITDA for the three months ended March 31, 2009 and 2008 is
as follows:





Three
      months ended
              March
      31,2009
            
            
            2008Net
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            3,693
            
            
            $
            (11,913
            )Depreciation,
      depletion and amortization
            
            
            26,263
            
            
            
            21,957Interest
      expense, net
            
            
            13,018
            
            
            
            12,571Income
      tax expense (benefit)
            
            
            1,495
            
            
            
            (8,034
            )Noncontrolling
      interest
            
            
            29
            
            
            
            7Adjusted
      EBITDA
            
            $
            44,498
            
            
            $
            14,588





21







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(14)
Supplementary Guarantor Information





International
Coal Group, Inc. (the “Parent Company”) issued $175,000 of Senior Notes due 2014
(the “Notes”) in June 2006 and $225,000 of Convertible Senior Notes due 2012
(the “Convertible Notes”) in July 2007. The Parent Company has no independent
assets or operations other than those related to the issuance, administration
and repayment of the Notes and the Convertible Notes. All subsidiaries of the
Parent Company (the “Guarantors”), except for a minor non-guarantor joint
venture, have fully and unconditionally guaranteed the Notes and the Convertible
Notes on a joint and several basis. The Guarantors are 100% owned, directly or
indirectly, by the Parent Company. Accordingly, condensed consolidating
financial information for the Parent Company and the Guarantors is not
presented.





The
Notes and the Convertible Notes are senior obligations of the Parent Company and
are guaranteed on a senior basis by the Guarantors and rank senior in right of
payment to the Parent Company’s and Guarantors’ future subordinated
indebtedness. Amounts borrowed under the Amended Credit Facility are secured by
substantially all of the assets of the Parent Company and the Guarantors on a
priority basis, so the Notes and Convertible Notes are effectively subordinated
to amounts borrowed under the Amended Credit Facility. Other than for corporate
related purposes or interest payments required by the Notes or Convertible
Notes, the Amended Credit Facility restricts the Guarantors’ abilities to make
loans or pay dividends to the Parent Company in excess of $25,000 per year (or
at all upon an event of default) and restricts the ability of the Parent Company
to pay dividends. Therefore, all but $25,000 of the subsidiaries’ assets are
restricted assets.





The
Parent Company and Guarantors are subject to certain covenants under the
indenture for the Notes. Under these covenants, the Parent Company and
Guarantors are subject to limitations on the incurrence of additional
indebtedness, payment of dividends and the incurrence of liens, however, the
indenture contains no restrictions on the ability of the Guarantors to pay
dividends or make payments to the Parent Company.





The
obligations of the Guarantors are limited to the maximum amount permitted under
bankruptcy law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law respecting fraudulent
conveyance or fraudulent transfer.





22







INTERNATIONAL
COAL GROUP, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


March
31, 2009


(Dollars
in thousands, except per share amounts)





(15)
Restatement of Previously Issued Financial Statements





Subsequent
to the issuance of its consolidated financial statements for the period ended
March 31, 2009, the Company identified an error in the application of SFAS No.
158 on its employee benefits liability. The Company had not previously recorded
the unfunded status of its black lung obligation as a liability in its statement
of financial position or recognized changes in the funded status of the
obligation in the year in which the changes occurred through comprehensive
income. This error resulted in an overstatement of the employee benefits
liability and accumulated other comprehensive loss and an understatement of the
deferred tax liability as of March 31, 2009. The Company does not believe these
errors are material to the consolidated financial statements.





Consolidated
      Balance Sheet
            
            As
      Originally Filed
            
            
            Correction
      for Application of SFAS No. 158
            
            
            As
              RestatedMarch
      31, 2009Employee
      benefits
            
            $
            63,768
            
            
            $
            (4,533
            )
            
            $
            59,235Deferred
      income taxes
            
            
            49,852
            
            
            
            1,714
            
            
            
            51,566Total
      liabilities
            
            
            846,516
            
            
            
            (2,819
            )
            
            
            843,697Accumulated
      other comprehensive loss
            
            
            (5,113
            )
            
            
            2,819
            
            
            
            (2,294
            )Total
      International Coal Group, Inc. stockholders' equity
            
            
            511,271
            
            
            
            2,819
            
            
            
            514,090Total
      stockholders’ equity
            
            
            511,335
            
            
            
            2,819
            
            
            
            514,154





Consolidated
      Statement of Cash Flows
            
            As
      Originally Filed
            
            
            Correction
      for Application of SFAS No. 158
            
            
            As
              RestatedThree
      months ended March 31, 2009Amortization
      of accumulated postretirement benefit obligation
            
            $
            73
            
            
            $
            (98
            )
            
            $
            (25
            )Other
      liabilities
            
            
            2,984
            
            
            
            98
            
            
            
            3,082Three
      months ended March 31, 2008Amortization
      of accumulated postretirement benefit obligation
            
            $
            107
            
            
            $
            (237
            )
            
            $
            (130
            )Other
      liabilities
            
            
            (180
            )
            
            
            237
            
            
            
            57





23










Item 2.
            Management’s Discussion and Analysis of Financial Condition and
      Results of Operations





Cautionary
Note Regarding Forward-Looking Statements





This
Quarterly Report on Form 10-Q/A contains forward-looking statements that are not
statements of historical fact and may involve a number of risks and
uncertainties. We have used the words “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project” and similar
terms and phrases, including references to assumptions, in this report to
identify forward-looking statements. These forward-looking statements are made
based on expectations and beliefs concerning future events affecting us and are
subject to uncertainties and factors relating to our operations and business
environment, all of which are difficult to predict and many of which are beyond
our control, that could cause our actual results to differ materially from those
matters expressed in or implied by these forward-looking statements. The
following factors are among those that may cause actual results to differ
materially from our forward-looking statements:





•
            market
      demand for coal, electricity and steel;•
            availability
      of qualified workers;•
            future
      economic or capital market conditions;•
            weather
      conditions or catastrophic weather-related damage;•
            our
      production capabilities;•
            consummation
      of financing, acquisition or disposition transactions and the effect
      thereof on our business;•
            a
      significant number of conversions of our Convertible Senior Notes prior to
      maturity;•
            our
      plans and objectives for future operations and expansion or
      consolidation;•
            our
      relationships with, and other conditions affecting, our
      customers;•
            availability
      and costs of key supplies or commodities such as diesel fuel, steel,
      explosives and tires;•
            availability
      and costs of capital equipment;•
            prices
      of fuels which compete with or impact coal usage, such as oil and natural
      gas;•
            timing
      of reductions or increases in customer coal
inventories;•
            long-term
      coal supply arrangements;•
            risks
      in or related to coal mining operations, including risks relating to
      third-party suppliers and carriers operating at our mines or
      complexes;•
            unexpected
      maintenance and equipment failure;•
            environmental,
      safety and other laws and regulations, including those directly affecting
      our coal mining and production, and those affecting our customers’ coal
      usage;•
            ability
      to obtain and maintain all necessary governmental permits and
      authorizations;•
            competition
      among coal and other energy producers in the United States and
      internationally;•
            railroad,
      barge, trucking and other transportation availability, performance and
      costs;•
            employee
      benefits costs and labor relations issues;•
            replacement
      of our reserves;•
            our
      assumptions concerning economically recoverable coal reserve
      estimates;





24











•
            availability
      and costs of credit, surety bonds and letters of
credit;•
            title
      defects or loss of leasehold interests in our properties which could
      result in unanticipated costs or inability to mine these
      properties;•
            future
      legislation and changes in regulations or governmental policies or changes
      in interpretations or enforcement thereof, including with respect to
      safety enhancements and environmental initiatives relating to global
      warming;•
            impairment
      of the value of our long-lived and deferred tax assets;•
            our
      liquidity, including the ability to adhere to financial covenants related
      to our borrowing arrangements, results of operations and financial
      condition;•
            adequacy
      and sufficiency of our internal controls; and•
            legal
      and administrative proceedings, settlements, investigations and claims and
      the availability of related insurance
coverage.





You
should keep in mind that any forward-looking statement made by us in this
Quarterly Report on Form 10-Q/A speaks only as of the date on which we make it.
New risks and uncertainties arise from time to time, and it is impossible for us
to predict these events or how they may affect us. We have no duty to, and do
not intend to, update or revise the forward-looking statements in this report
after the date of this report, except as may be required by law. In light of
these risks and uncertainties, you should keep in mind that any forward-looking
statement made in this report might not occur. When considering these
forward-looking statements, you should keep in mind the cautionary statements in
this document and in our other SEC filings, including the more detailed
discussion of these factors, as well as other factors that could affect our
results, contained in Item 3, “Quantitative and Qualitative Disclosures
About Market Risk,” as well as in the “Risks Relating to Our Business” section
of Item 1A of our 2008 Annual Report on Form 10-K/A.





25







RESULTS
OF CONTINUING OPERATIONS





Three
months ended March 31, 2009 compared to the three months ended March 31,
2008





Revenues,
coal sales revenues by segment and tons sold by segment





The
following table depicts revenues for the three months ended March 31, 2009 and
2008 for the indicated categories:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
      or Tons
            
            %(in thousands, except percentages
      and per ton data)Coal
      sales revenues
            
            $
            273,816
            
            
            $
            226,604
            
            $
            47,212
            
            21
            %Freight
      and handling revenues
            
            
            8,634
            
            
            
            11,283
            
            
            (2,649
            )
            (23
            )%Other
      revenues
            
            
            22,516
            
            
            
            14,038
            
            
            8,478
            
            60
            %Total
      revenues
            
            $
            304,966
            
            
            $
            251,925
            
            $
            53,041
            
            21
            %Tons
      sold
            
            
            4,680
            
            
            
            4,850
            
            
            (170
            )
            (4
            )%Coal
      sales revenue per ton
            
            $
            58.51
            
            
            $
            46.72
            
            $
            11.79
            
            25
            %





The
following table depicts coal sales revenues by operating segment for three
months ended March 31, 2009 and 2008:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Central
      Appalachian
            
            $
            184,122
            
            
            $
            146,792
            
            $
            37,330
            
            25
            %Northern
      Appalachian
            
            
            60,251
            
            
            
            45,221
            
            
            15,030
            
            33
            %Illinois Basin
            
            
            18,723
            
            
            
            17,894
            
            
            829
            
            5
            %Ancillary
            
            
            10,720
            
            
            
            16,697
            
            
            (5,977
            )
            (36
            )%Total
      coal sales revenues
            
            $
            273,816
            
            
            $
            226,604
            
            $
            47,212
            
            21
            %





The
following table depicts tons sold by operating segment for the three months
ended March 31, 2009 and 2008:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            Tons
            
            %(in thousands, except percentages)Central
      Appalachian
            
            
            2,769
            
            
            
            2,882
            
            (113
            )
            (4
            )%Northern
      Appalachian
            
            
            1,108
            
            
            
            976
            
            132
            
            14
            %Illinois Basin
            
            
            590
            
            
            
            600
            
            (10
            )
            (2
            )%Ancillary
            
            
            213
            
            
            
            392
            
            (179
            )
            (46
            )%Total
      tons sold
            
            
            4,680
            
            
            
            4,850
            
            (170
            )
            (4
            )%





Coal sales
revenues—Coal sales revenues are derived from sales of produced coal and
brokered coal contracts. Coal sales revenues increased for the three months
ended March 31, 2009 compared to the three months ended March 31, 2008 due to a
25% increase in sales realization per ton resulting from favorable pricing on
new or amended short- and long-term contracts entered into throughout 2008.
Partially offsetting the impact of improved realization per ton was a 4%
decrease in tons sold.





26








Central Appalachian.Coal
sales revenues from our Central Appalachian segment for the three months ended
March 31, 2009 increased over the same period in 2008 primarily due to an
increase of $15.55 per ton, which was driven by higher average prices of our
coal sold pursuant to supply agreements. Partially offsetting the increase in
average prices was a 4% decrease in tons sold.





Northern Appalachian. For the
three months ended March 31, 2009, our Northern Appalachian coal sales revenues
increased due to an increase of $8.08 per ton resulting from higher average
prices of coal sold under coal supply contracts. Additionally, we experienced an
increase in tons sold, primarily from our Sentinel and Harrison complexes, as
production increased toward targeted levels.





Illinois Basin. The
increase in coal sales revenues from our Illinois Basin segment for the
three months ended March 31, 2009 was due to an increase of $1.91 per ton,
partially offset by a 2% decrease in tons sold.





Ancillary. Our Ancillary
segment’s coal sales revenues are comprised of coal sold under brokered coal
contracts. For the three months ended March 31, 2009, our Ancillary coal sales
revenues decreased due to a 46% decrease in tons sold related to the expiration
of certain coal supply agreements. The decrease in tons sold was partially
offset by an increase of $7.66 per ton resulting from higher average
prices.





Freight and
handling revenues—Freight and handling revenues represent reimbursement
of freight and handling costs for certain shipments for which we initially pay
the costs and are then reimbursed by the customer. Freight and handling revenues
and costs decreased for the three months ended March 31, 2009 compared to the
comparable period of 2008 primarily due to decreased sales volumes.
Additionally, transportation rates and fuel surcharges have decreased as a
result of decreased fuel prices subsequent to the first quarter of
2008.





Other
revenues—The increase in other revenues for the three months ended March
31, 2009 compared to the three months ended March 31, 2008 were due to increases
in contract buydown income and contract mining revenue. Partially offsetting
these increases was decreased revenue generated by coalbed methane wells owned
jointly by our subsidiary, CoalQuest, and CDX Gas, LLC (“CDX”) and decreased
sales of scrap materials.





Costs
and expenses





The
following table depicts cost of operations for the three months ended March 31,
2009 and 2008 for the indicated categories:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages
      and per ton data)Cost
      of coal sales
            
            $
            231,965
            
            
            $
            208,804
            
            $
            23,161
            
            11
            %Freight
      and handling costs
            
            
            8,634
            
            
            
            11,283
            
            
            (2,649
            )
            (23
            )%Cost
      of other revenues
            
            
            9,336
            
            
            
            8,935
            
            
            401
            
            4
            %Depreciation,
      depletion and amortization
            
            
            26,263
            
            
            
            21,957
            
            
            4,306
            
            20
            %Selling,
      general and administrative expenses
            
            
            10,611
            
            
            
            8,526
            
            
            2,085
            
            24
            %Gain
      on sale of assets
            
            
            (78
            )
            
            
            (211
            )
            
            133
            
            (63
            )%Total
      costs and expenses
            
            $
            286,731
            
            
            $
            259,294
            
            $
            27,437
            
            11
            %Cost
      of coal sales per ton
            
            $
            49.57
            
            
            $
            43.05
            
            $
            6.52
            
            15
            %





27








The
following table depicts cost of coal sales by operating segment for the three
months ended March 31, 2009 and 2008:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Central
      Appalachian
            
            $
            155,831
            
            
            $
            133,180
            
            $
            22,651
            
            17
            %Northern
      Appalachian
            
            
            52,378
            
            
            
            45,160
            
            
            7,218
            
            16
            %Illinois Basin
            
            
            16,213
            
            
            
            15,951
            
            
            262
            
            2
            %Ancillary
            
            
            7,543
            
            
            
            14,513
            
            
            (6,970
            )
            (48
            )%Cost
      of coal sales
            
            $
            231,965
            
            
            $
            208,804
            
            $
            23,161
            
            11
            %





Cost of coal
sales—For the three months ended March 31, 2009, our cost of coal sales
increased compared to the three months ended March 31, 2008 primarily as a
result of a 15% increase in cost per ton.





Central Appalachian. Cost of
coal sales from our Central Appalachian segment increased to $56.27 per ton for
the three months ended March 31, 2009 from $46.21 per ton for the three months
ended March 31, 2008 primarily as a result of increased labor and benefits,
repairs and maintenance and royalty expenses. Labor and benefit costs increased
due to wage increases in the second half of 2008 in an effort to remain
competitive in a tight labor market. Repairs and maintenance costs increased as
a result of several major repairs performed at certain of our Central
Appalachian complexes. Royalties increased for the three months ended March 31,
2009 due to an increase in sales realization on tons sold and to increased
mining of leased reserves. Further impacting the increase in cost of coal sales
were increases in severance taxes, diesel fuel, site preparation and maintenance
costs and related supplies.





Northern Appalachian. Our
Northern Appalachian segment cost of coal sales per ton increased to $47.30 for
the three months ended March 31, 2009 from $46.27 for the three months ended
March 31, 2008 due to increased labor and benefits in the second half of 2008 in
order to maintain continuity of our labor force. We also experienced increases
in operating supplies and royalty expenses. Partially offsetting these increases
was a decrease in repairs and maintenance, transportation and purchased coal
costs.





Illinois Basin. For the
three months ended March 31, 2009, our Illinois Basin cost of coal sales
increased by $0.90 per ton primarily due to increased labor and benefits and
repairs and maintenance costs. Labor and benefits increased in the second half
of 2008 as a result of increased wages in an effort to retain skilled miners.
Additionally, repairs and maintenance costs have increased due to two major
repairs on underground mining equipment during the three months ended March 31,
2009 with no comparable repairs performed in the first quarter of
2008.





Ancillary. Cost of coal sales from our Ancillary segment decreased for
the three months ended March 31, 2009 primarily due to a decrease in purchased
coal costs related to the expiration of certain brokered coal contracts
throughout 2008 and continuing into 2009.





Cost of other
revenues—For the three months ended March 31, 2009, cost of other
revenues increased primarily due to increases in labor and benefits and ash
disposal transportation costs. Partially offsetting the increase was a decrease
in gathering fees related to coalbed methane wells owned jointly by our
subsidiary, CoalQuest, and CDX and costs related to the sale of parts and
equipment in the first quarter of 2008.





Depreciation, depletion and amortization—Depreciation, depletion and
amortization expense increased for the three months ended March 31, 2009
primarily as a result of capital spending throughout 2008 and in the first
quarter 2009, as well as a decrease in amortization income related to the
completion of shipments subsequent to the first quarter of 2008 under a below
market contract. These increases were partially offset by a decrease in
amortization of coalbed methane well development costs.





28







Selling, general
and administrative expenses—Selling, general and administrative expenses
for the three months ended March 31, 2009 increased primarily due to increases
in professional fees, taxes and licenses and share-based
compensation.





Adjusted
EBITDA by Operating Segment





Adjusted
EBITDA represents net income or loss attributable to International Coal Group,
Inc. before deducting net interest expense, income taxes, depreciation,
depletion, amortization and noncontrolling interest. Adjusted EBITDA is
presented because it is an important supplemental measure of our performance
used by our chief operating decision maker in such areas as capital investment
and allocation of resources. It is considered “adjusted” as we adjust EBITDA for
noncontrolling interest. Other companies in our industry may calculate Adjusted
EBITDA differently than we do, limiting its usefulness as a comparative measure.
Adjusted EBITDA is reconciled to its most comparable GAAP measure on page 31 of
this Quarterly Report on Form 10-Q/A and in Note 13 to our condensed
consolidated financial statements for the three months ended March 31,
2009.





The
following table depicts operating segment Adjusted EBITDA for the three months
ended March 31, 2009 and 2008:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Central
      Appalachian
            
            $
            29,433
            
            
            $
            15,578
            
            $
            13,855
            
            89
            %Northern
      Appalachian
            
            
            10,152
            
            
            
            1,795
            
            
            8,357
            
            466
            %Illinois Basin
            
            
            2,871
            
            
            
            2,348
            
            
            523
            
            22
            %Ancillary
            
            
            2,042
            
            
            
            (5,133
            )
            
            7,175
            
            *
            %Total
      Adjusted EBITDA
            
            $
            44,498
            
            
            $
            14,588
            
            $
            29,910
            
            205
            %





*
not meaningful





Central Appalachian. Adjusted
EBITDA for the three months ended March 31, 2009 increased compared to the three
months ended March 31, 2008 primarily due to a $15.55 per ton increase in sales
realization, resulting in $5.49 per ton increase in profit margins. Partially
offsetting the increase in profit margins was a decrease of approximately
113,000 tons sold.





Northern Appalachian. The
increase in Adjusted EBITDA was due to a combination of an increase in sales
realization of $8.08 per ton, resulting in increased profit margins of $7.05 per
ton, as well as an increase of approximately 132,000 tons sold.





Illinois Basin. Adjusted
EBITDA increased during the three months ended March 31, 2009 related to an
increase in sales realization of $1.91 per ton compared to the three months
ended March 31, 2008.





Ancillary. The increase in
Adjusted EBITDA was primarily due to an increase in sales realization of $7.66
per ton, resulting in profit margins of $9.32 per ton. Further impacting the
increase in Adjusted EBITDA from our Ancillary segment were increases in
contract buydown income and contract mining revenue. Partially offsetting these
increases was decreased revenue generated by coalbed methane wells owned jointly
by our subsidiary, CoalQuest, and CDX and a decrease of approximately 179,000
tons sold related to the expiration of brokered coal contracts throughout
2008.





29







Reconciliation of Adjusted EBITDA to
Net income (loss) by Operating Segment





The
following tables reconcile Adjusted EBITDA to net income (loss) by operating
segment for the three months ended March 31, 2009 and 2008:





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Central
      AppalachianNet
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            8,079
            
            
            $
            (719
            )
            $
            8,798
            
            *
            %Depreciation,
      depletion and amortization
            
            
            17,590
            
            
            
            15,846
            
            
            1,744
            
            11
            %Interest
      expense, net
            
            
            908
            
            
            
            451
            
            
            457
            
            101
            %Income
      tax expense
            
            
            2,856
            
            
            
            —
            
            
            2,856
            
            100
            %Adjusted
      EBITDA
            
            $
            29,433
            
            
            $
            15,578
            
            $
            13,855
            
            89
            %





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Northern
      AppalachianNet
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            3,217
            
            
            $
            (491
            )
            $
            3,708
            
            *
            %Depreciation,
      depletion and amortization
            
            
            5,575
            
            
            
            2,127
            
            
            3,448
            
            162
            %Interest
      expense, net
            
            
            131
            
            
            
            152
            
            
            (21
            )
            (14
            )%Income
      tax expense
            
            
            1,200
            
            
            
            —
            
            
            1,200
            
            100
            %Noncontrolling
      interest
            
            
            29
            
            
            
            7
            
            
            22
            
            314
            %Adjusted
      EBITDA
            
            $
            10,152
            
            
            $
            1,795
            
            $
            8,357
            
            466
            %





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)Illinois BasinNet
      income attributable to International Coal Group, Inc.
            
            $
            842
            
            
            $
            478
            
            $
            364
            
            76
            %Depreciation,
      depletion and amortization
            
            
            1,710
            
            
            
            1,813
            
            
            (103
            )
            (6
            )%Interest
      expense, net
            
            
            69
            
            
            
            57
            
            
            12
            
            21
            %Income
      tax expense
            
            
            250
            
            
            
            —
            
            
            250
            
            100
            %Adjusted
      EBITDA
            
            $
            2,871
            
            
            $
            2,348
            
            $
            523
            
            22
            %





Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2009
            
            
            2008
            
            $
            
            %(in thousands, except percentages)AncillaryNet
      loss attributable to International Coal Group, Inc.
            
            $
            (8,445
            )
            
            $
            (11,181
            )
            $
            2,736
            
            24
            %Depreciation,
      depletion and amortization
            
            
            1,388
            
            
            
            2,171
            
            
            (783
            )
            (36
            )%Interest
      expense, net
            
            
            11,910
            
            
            
            11,911
            
            
            (1
            )
            *
            %Income
      tax benefit
            
            
            (2,811
            )
            
            
            (8,034
            )
            
            5,223
            
            65
            %Adjusted
      EBITDA
            
            $
            2,042
            
            
            $
            (5,133
            )
            $
            7,175
            
            140
            %





30










Three
      months ended
              March
      31,
            
            Increase
              (Decrease)2008
            
            
            2007
            
            $
            
            %(in thousands, except percentages)ConsolidatedNet
      income (loss) attributable to International Coal Group,
    Inc.
            
            $
            3,693
            
            
            $
            (11,913
            )
            $
            15,606
            
            *
            %Depreciation,
      depletion and amortization
            
            
            26,263
            
            
            
            21,957
            
            
            4,306
            
            20
            %Interest
      expense, net
            
            
            13,018
            
            
            
            12,571
            
            
            447
            
            4
            %Income
      tax expense (benefit)
            
            
            1,495
            
            
            
            (8,034
            )
            
            9,529
            
            *
            %Noncontrolling
      interest
            
            
            29
            
            
            
            7
            
            
            22
            
            314
            %Adjusted
      EBITDA
            
            $
            44,498
            
            
            $
            14,588
            
            $
            29,910
            
            205
            %





*
not meaningful





Liquidity
and Capital Resources





Our
business is capital intensive and requires substantial capital expenditures for,
among other things, purchasing and upgrading equipment used in developing and
mining our coal lands, as well as remaining in compliance with environmental
laws and regulations. Our principal liquidity requirements are to finance our
coal production, fund capital expenditures and service our debt and reclamation
obligations. We may also engage in acquisitions from time to time. Our primary
sources of liquidity to meet these needs are cash on hand, cash flows from sales
of our coal, other income, borrowings under our senior credit facility and
capital equipment financing arrangements.





We
believe the principal indicators of our liquidity are our cash position and
remaining availability under our credit facility. As of March 31, 2009, our
available liquidity was $93.0 million, including cash of $66.6 million and $26.4
million available for borrowing under our $100.0 million senior credit facility.
Total debt represented 47% of our total capitalization at March 31, 2009. Our
total capitalization represents our current and long-term debt combined with our
total stockholders’ equity.





In
February 2009, we executed an amendment to our $100.0 million credit facility
that affected certain 2009 debt covenants. The amendment modified the maximum
permitted leverage and minimum interest coverage ratios. The amendment also
decreased the maximum capital spending and added a minimum liquidity
requirement. Debt covenants for years subsequent to 2009 were not affected by
the amendment. Management believes, based on currently available information,
that we will be able to meet the financial covenants in our credit facility
through the end of 2009. Current market volatility, surrounding coal prices in
particular, has made it extraordinarily difficult to forecast results for 2010
and beyond. Accordingly, there is uncertainty as to whether we will be able
to remain in compliance with our debt covenants for those periods. We will seek
a waiver or amendment from our lenders or pursue other alternatives for any
period we believe we will not be in compliance with these financial
covenants.





The
recent and unprecedented disruption in the current credit markets has had a
significant adverse impact on a number of financial institutions. At this time,
our liquidity has not been materially impacted by the current credit environment
and we do not expect that it will be materially impacted in the
near-future. We will continue to closely monitor our liquidity and the
credit markets. However, we cannot predict with any certainty the impact to us
of any further disruption in the credit environment.




31







We
currently expect our total capital expenditures will be approximately $90.0
million to $95.0 million in 2009, substantially all of which will be for
equipment and infrastructure at our existing operations. Cash paid for capital
expenditures was approximately $18.8 million for the three months ended March
31, 2009. We have funded and will continue to fund these capital expenditures
from our internal operations and financing arrangements. We believe that these
sources of capital and our $50.0 million equipment revolving credit facility
with Caterpillar Financial Services Corporation will be sufficient to fund our
anticipated capital expenditures under our current budget plan through the first
quarter of 2010. Although we expect to experience some periods of tight
liquidity, we expect to be able to manage through such periods. To the
extent necessary, management believes it has flexibility in the timing of the
cash requirements by managing the pace of capital spending. In addition,
management may from time to time raise additional capital through the
disposition of non-core assets or engaging in sale-leaseback transactions. The
need and timing of seeking additional capital in the future will be subject to
market conditions.





Approximately
$9.1 million of cash paid for capital expenditures in the three months ended
March 31, 2009 was attributable to our Central Appalachian operations. This
amount represents investments of approximately $2.9 million in our Beckley
mining complex and $2.1 million at Hazard, as well as additional investments of
$4.1 million for upgrades at the remaining Central Appalachian operations. We
paid approximately $6.3 million at our Northern Appalachian operations in the
three months ended March 31, 2009, approximately $2.5 million of which was for
investments in our Sentinel property. Expenditures of approximately $1.8 million
for our Illinois Basin operations were for ongoing operations improvements.
Approximately $1.6 million of cash paid for capital expenditures for the three
months ended March 31, 2009 was within our Ancillary segment for safety
equipment, as well as for upgrades at various other subsidiaries.





More
stringent regulatory requirements of the mining industry demand substantial
capital expenditures to meet safety standards. For the three months ended March
31, 2009, we spent $0.4 million to meet these standards and anticipate spending
an additional $4.3 million for the remainder of 2009.





Cash
Flows





Net
cash provided by operating activities was $18.5 million for the three months
ended March 31, 2009, an increase of $36.5 million from the same period in 2008.
This increase is attributable to an increase in net income of $29.4 million
after adjustment for non-cash charges and a $7.1 million increase due to the
change in net operating assets and liabilities.





For
the three months ended March 31, 2009, net cash used in investing activities was
$18.9 million compared to $33.9 million for the three months ended March 31,
2008. For the three months ended March 31, 2009, $18.8 million of cash was used
to upgrade and support existing mining operations compared to $34.1 million in
the same period of 2008.





Net
cash provided by financing activities of $3.1 million for the three months ended
March 31, 2009 was due to borrowings on our long-term debt of $9.1 million used
to finance equipment. Offsetting the borrowings were repayments on our short-
and long-term debt of $5.5 million and deferred finance costs of $0.5 million
paid to amend our credit facility. We also financed $3.8 million of equipment
through additional financing arrangements.





32







Credit
Facility and Long-term Debt Obligations





As
of March 31, 2009 our total long-term indebtedness consisted of the following
(in thousands):





March
      31,
              20099.00%
      Convertible Senior Notes, due 2012, net of debt discount of
      $16,367
            
            $
            208,63310.25%
      Senior Notes, due 2014
            
            
            175,000Equipment
      notes
            
            
            53,300Capital
      leases and other
            
            
            6,030Total
            
            
            442,963Less
      current portion
            
            
            (18,292
            )Long-term
      debt
            
            $
            424,671





Other





As
a regular part of our business, we review opportunities for, and engage in
discussions and negotiations concerning, the acquisition of coal mining assets
and interests in coal mining companies, and acquisitions of, or combinations
with, coal mining companies. When we believe that these opportunities are
consistent with our growth plans and our acquisition criteria, we will make bids
or proposals and/or enter into letters of intent and other similar agreements,
which may be binding or nonbinding, that are customarily subject to a variety of
conditions and usually permit us to terminate the discussions and any related
agreement if, among other things, we are not satisfied with the results of our
due diligence investigation. Any acquisition opportunities we pursue could
materially affect our liquidity and capital resources and may require us to
incur indebtedness, seek equity capital or both. There can be no assurance that
additional financing will be available on terms acceptable to us, or at
all.





Additionally,
we have other long-term liabilities, including, but not limited to, mine
reclamation and mine closure costs, below-market coal supply agreements and
“black lung” costs, and some of our subsidiaries have long-term liabilities
relating to retiree health and other employee benefits.





Our
ability to meet our long-term debt obligations will depend upon our future
performance, which in turn, will depend upon general economic, financial and
business conditions, along with competition, legislation and regulation—factors
that are largely beyond our control. We believe that cash flow from operations,
together with other available sources of funds, including additional borrowings
under our credit facility and equipment credit facility, will be adequate at
least through the first quarter of 2010 for making required payments of
principal and interest on our indebtedness and for funding anticipated capital
expenditures and working capital requirements. Although we expect to experience
some periods of tight liquidity, we expect to be able to manage through such
periods. To the extent necessary, management believes it has some flexibility to
manage its cash requirements by controlling the pace and timing of capital
spending, utilizing availability under its credit facilities, reducing certain
costs and idling high-cost operations. In addition, management may from time to
time raise additional capital through the disposition of non-core assets or
engaging in sale-leaseback transactions. However, we cannot assure you that our
operating results, cash flow and capital resources will be sufficient for
repayment of our debt obligations in the future.





Our
Convertible Senior Notes (the “Convertible Notes”) were not convertible as of
March 31, 2009. In the event that the Convertible Notes were to become
convertible and a significant number of the holders were to convert their notes
prior to maturity, we may not have enough available funds at any particular time
to make the required repayments. Under these circumstances, we would look to WL
Ross & Co. LLC, our banking group and other potential lenders to obtain
short-term funding until such time that we could secure necessary financing on a
long-term basis. The availability of any such financing would depend upon the
circumstances at the time, including the terms of any such financing, and other
factors.





33







Recent
Accounting Pronouncements





Fair Value Measurements. In
September 2006, the FASB issued SFAS No. 157,Fair Value Measurements
(“SFAS No. 157”). SFAS No. 157 clarifies the definition of fair value,
establishes a framework for measuring fair value and expands the disclosures on
fair value measurements. SFAS No. 157 is effective for fiscal years
beginning after November 15, 2007. Adoption of SFAS No. 157 did not
have a material impact on our financial position, results of operations or cash
flows; however, adoption did result in additional information being included in
the footnotes accompanying our consolidated financial statements.





In
February 2008, the FASB issued FASB Staff Position (“FSP”) FAS No. 157-2,Effective Date of FASB Statement
No. 157 (“FSP FAS No. 157-2”). FSP FAS No. 157-2 permits delayed adoption
of SFAS No. 157 for certain non-financial assets and liabilities, which are not
recognized at fair value on a recurring basis, until fiscal years, and interim
periods within those fiscal years, beginning after November 15, 2008.
Adoption of FSP FAS No. 157-2 did not have a material impact on our financial
position, results of operations or cash flows.





In
October 2008, the FASB issued FSP FAS No. 157-3,Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active (“FSP FAS
No. 157-3”). FSP FAS No. 157-3 clarified the application of SFAS No. 157 in an
inactive market. It demonstrated how the fair value of a financial asset is
determined when the market for that financial asset is inactive. FSP FAS No.
157-3 was effective upon issuance, including prior periods for which financial
statements had not been issued. Adoption of FSP FAS No. 157-3 did not have a
material impact on our financial position, results of operations or cash
flows.





In
April 2009, the FASB issued FSP FAS No. 157-4, Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS No.
157-4”). FSP FAS No. 157-4 provides additional guidance on estimating fair value
when the volume and level of activity for an asset or liability have
significantly decreased in relation to normal market activity for the asset or
liability. FSP FAS No. 157-4 also provides additional guidance on circumstances
that may indicate that a transaction is not orderly. FSP FAS No. 157-4 is
effective for interim and annual periods ending after June 15, 2009. We do not
believe that adoption of FSP FAS No. 157-4 will materially impact our financial
position, results of operations or cash flows.





Convertible Debt. In May 2008,
the FASB issued FSP APB 14-1,Accounting for Convertible Debt Instruments That May be Settled in Cash Upon
Conversion (Including Partial Cash Settlement) (“FSP APB 14-1”). FSP APB
14-1 requires the liability and equity components of convertible debt
instruments that may be settled in cash upon conversion to be separately
accounted for in a manner that reflects the issuer’s nonconvertible debt
borrowing rate. To allocate the proceeds from a convertible debt offering in
this manner, a company would first need to determine the carrying amount of the
liability component, which would be based on the fair value of a similar
liability (excluding any embedded conversion options). The resulting debt
discount would be amortized over the period during which the debt is expected to
be outstanding as additional non-cash interest expense. FSP APB 14-1 was
effective for financial statements for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years, and has
been applied retrospectively for all periods presented. We have determined our
non-convertible borrowing rate would have been 11.7% at issuance. The effect of
adoption of FSP APB 14-1 was as follows:





Three
      months ended
              March
      31, 2008Consolidated
      Statement of Operations
            
            As
      Previously
              Reported
            
            
            Adjustment
            
            
            As
              AdjustedInterest expense,
      net
            
            $
            (11,981
            )
            
            $
            (590
            )
            
            $
            (12,571
            )Income
      tax benefit
            
            
            7,811
            
            
            
            223
            
            
            
            8,034Net
      loss attributable to International Coal Group, Inc.
            
            
            (11,546
            )
            
            
            (367
            )
            
            
            (11,913
            )





34

















Three
      months ended
              March
      31, 2008Consolidated
      Statement of Cash Flows
            
            As
      Previously
              Reported
            
            Adjustment
            
            
            As
              AdjustedNet
      loss
            
            $
            (11,539
            )(1)
            $
            (367
            )
            
            $
            (11,906
            )Amortization
      of deferred finance costs and debt discount
            
            
            706
            
            
            782
            
            
            
            1,488Deferred
      income taxes
            
            
            (7,811
            )
            
            (222
            )
            
            
            (8,033
            )Additions
      to property, plant, equipment and mine development
            
            
            (33,876
            )
            
            (193
            )
            
            
            (34,069
            )





(1)
            Amount
      reflects immaterial adjustment of $7 related to our retrospective adoption
      of SFAS No. 160.





Business Combinations. In
December 2007, the FASB issued SFAS No. 141 (Revised 2007),Business Combinations (“SFAS
No. 141(R)”). SFAS No. 141(R) will significantly change the accounting
for business combinations. Under SFAS No. 141(R), an acquiring entity will
be required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited exceptions. SFAS
No. 141(R) will change the accounting treatment for certain specific
acquisition-related items including: (i) expensing acquisition-related
costs as incurred, (ii) valuing noncontrolling interests at fair value at
the acquisition date and (iii) expensing restructuring costs associated
with an acquired business. SFAS No. 141(R) also includes a substantial
number of new disclosure requirements. SFAS No. 141(R) is to be applied to
any business combination for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after
December 15, 2008. Upon adoption, SFAS No. 141(R) will impact the
accounting for our future business combinations, as well as for tax
uncertainties and valuation allowances from prior acquisitions.





Noncontrolling Interests. In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in
Consolidated Financial Statements (“SFAS No. 160”). SFAS
No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary
(minority interest) is an ownership interest in the consolidated entity that
should be reported as equity in the consolidated financial statements and
separate from the parent company’s equity. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the consolidated statement
of operations, of the amounts of consolidated net income attributable to the
parent and to the noncontrolling interest. SFAS No. 160 is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. Adoption of SFAS No. 160 impacted the
presentation of noncontrolling interest in our balance sheet and statements of
operations and cash flows. The impact of the changes in presentation was not
material.





Derivative Instruments. In
March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement
No. 133 (“SFAS No. 161”). SFAS No. 161 requires additional
disclosures for derivative instruments and hedging activities that include how
and why an entity uses derivatives, how these instruments and the related hedged
items are accounted for under FASB Statement No. 133,Accounting for Derivative
Instruments and Hedging Activities, and related interpretations and how
derivative instruments and related hedged items affect the entity’s financial
position, results of operations and cash flows. SFAS No. 161 is effective
for fiscal years, and interim periods within those fiscal years, beginning after
November 15, 2008. Adoption of SFAS No. 161 did not impact the
footnotes accompanying our consolidated financial statements.





35





GAAP Hierarchy. In
May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted
Accounting Principles (“SFAS No. 162”). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles. SFAS No. 162 directs the hierarchy to the entity, rather than
the independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles. SFAS No. 162 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 31, 2008. Adoption of SFAS No. 162 did not have a material impact
on our financial position, results of operations or cash flows.





Share-Based Payments. In June
2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that all outstanding unvested
share-based payment awards that contain rights to nonforfeitable dividends
participate in undistributed earnings with common shareholders. Awards of this
nature are considered participating securities and the two-class method of
computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1
is effective for fiscal years beginning after December 15, 2008. Adoption of FSP
EITF 03-6-1 did not have a material impact on our financial position, results of
operations or cash flows.





Financial Instruments. In
June 2008, the FASB ratified EITF 07-5,Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF
07-5”). EITF 07-5 provides that an entity should use a two step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument’s contingent
exercise and settlement provisions. It also clarifies the impact of foreign
currency denominated strike prices and market-based employee stock option
valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning after December 15, 2008. Adoption of EITF 07-5 did not have a material
impact on our financial position, results of operations or cash
flows.





Impairments. In April 2009, the FASB
issued FSP FAS No. 115-2 and FAS No. 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments (“FSP FAS No. 115-2 and FAS No. 124-2”).
FSP FAS No. 115-2 and FAS No. 124-2 modifies the other-than-temporary impairment
guidance for debt securities through increased consistency in the timing of
impairment recognition and enhanced disclosures related to the credit and
noncredit components of impaired debt securities that are not expected to be
sold. In addition, increased disclosures are required for both debt and equity
securities regarding expected cash flows, credit losses and an aging of
securities with unrealized losses. FSP FAS No. 115-2 and FAS No. 124-2 is
effective for interim and annual reporting periods that end after June 15, 2009.
We do not believe that adoption of FSP FAS No. 115-2 and FAS No. 124-2 will
materially impact our financial position, results of operations or cash
flows.





Fair Value Instruments. In
April 2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments (“FSP FAS No. 107-1 and APB 28-1”). FSP FAS No.
107-1 and APB 28-1 requires fair value disclosures for financial instruments
that are not reflected in the condensed consolidated balance sheets at fair
value to be disclosed on a quarterly basis, providing quantitative and
qualitative information about fair value estimates. FSP FAS No. 107-1 and APB
28-1 is effective for interim reporting periods ending after June 15, 2009. We
do not believe that adoption of FSP FAS No. 107-1 and APB 28-1 will materially
impact our financial position, results of operations or cash flows.





Critical
Accounting Policies, Estimates and Assumptions





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect reported amounts. These estimates and
assumptions are based on information available as of the date of the financial
statements. Accounting measurements at interim dates inherently involve greater
reliance on estimates than at year-end. The results of operations for the three
months ended March 31, 2009 are not necessarily indicative of results that can
be expected for the full year. Please refer to the section entitled “Critical
Accounting Policies and Estimates” of Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” in our Annual Report
on Form 10-K/A for the year ended December 31, 2008 for a discussion of our
critical accounting policies and estimates.





36










Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk





Interest rate risk. In May
2006, we entered into an Interest Rate Collar Agreement, which became effective
on March 31, 2007 and expired March 31, 2009, to hedge our interest
risk on $200.0 million notional amount of revolving debt. The interest rate
collar was designed as a cash flow hedge to offset the impact of changes in the
LIBOR interest rate above 5.92% and below 4.80%. This agreement was entered into
in conjunction with our amended and restated credit facility dated June 23,
2006. We recognized the change in the fair value of this agreement in the income
statement in the period of change.





Market price risk. We are
exposed to market price risk in the normal course of mining and selling coal. As
of March 31, 2009, 99% of 2009 planned production is committed for sale, leaving
approximately 1% uncommitted for sale. A hypothetical decrease of $1.00 per ton
in the market price for coal would not have a material impact on pre-tax
income.





Item 4.
            Controls
      and Procedures





Disclosure
Controls and Procedures





We
maintain a set of disclosure controls and procedures designed to provide
reasonable assurance that information required to be disclosed by us in reports
that we file or submit under the Securities Exchange Act of 1934 (the “Exchange
Act”) is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms. Our disclosure
controls and procedures are also designed to provide reasonable assurance that
information required to be disclosed in the reports that we file or submit under
the Exchange Act is accumulated and communicated to our management, including
the Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding required disclosure. As of the end of the period covered by
this Quarterly Report on Form 10-Q/A, an evaluation of the effectiveness of our
disclosure controls and procedures was carried out under the supervision and
with the participation of our management, including the Chief Executive Officer
and Chief Financial Officer. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures are effective.





Changes
in Internal Control Over Financial Reporting





There
have been no changes in our internal control over financial reporting during the
first quarter of fiscal 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.








37







PART
II





Item 1.
            Legal Proceedings





On
August 23, 2006, a survivor of the Sago mine accident, Randal McCloy, filed
a complaint in the Kanawha Circuit Court in Kanawha County, West Virginia. The
claims brought by Randal McCloy and his family against us and certain of our
subsidiaries, and against W.L. Ross & Co., and Wilbur L. Ross, Jr.,
individually, were dismissed on February 14, 2008, after the parties
reached a confidential settlement. Sixteen other complaints have been filed in
Kanawha Circuit Court by the representatives of many of the miners who died in
the Sago mine accident, and several of these plaintiffs have filed amended
complaints to expand the group of defendants in the cases. The complaints allege
various causes of action against us and our subsidiary, Wolf Run Mining Company,
one of our shareholders, W.L. Ross & Co., and Wilbur L. Ross Jr.,
individually, related to the accident and seek compensatory and punitive
damages. In addition, the plaintiffs also allege causes of action against other
third parties, including claims against the manufacturer of Omega block seals
used to seal the area where the explosion occurred and against the manufacturer
of self-contained self-rescuer (“SCSR”) devices worn by the miners at the Sago
mine. Some of these third parties have been dismissed from the actions upon
settlement. The amended complaints add other of our subsidiaries to the cases,
including ICG, Inc., ICG, LLC and Hunter Ridge Coal Company, unnamed parent,
subsidiary and affiliate companies of us, W.L. Ross & Co., and Wilbur
L. Ross Jr., and other third parties, including a provider of electrical
services and a supplier of components used in the SCSR devices. We believe that
we are appropriately insured for these and other potential claims, and we have
fully paid our deductible applicable to our insurance policies. In addition to
the dismissal of the McCloy claim, we have settled and dismissed five other
actions. These settlements required the release of us, our subsidiaries, W.L.
Ross & Co., and Wilbur L. Ross, Jr. Some of the plaintiffs involved in
one of the dismissed actions have sought permission from the Supreme Court of
Appeals of West Virginia to appeal the settlement, alleging that the settlement
negotiated by the decedent’s estate should not have been approved by the trial
court. The trial court overruled those plaintiffs’ objections to the settlement,
and, although the West Virginia Supreme Court of Appeals refused to stay the
effectiveness of the settlement, the plaintiffs’ petition for appeal to the West
Virginia Supreme Court of Appeals was recently presented to the court. The court
has deferred its decision as to whether it will hear the appeal, pending its
ruling on an unrelated case that shares similar issues. We will vigorously
defend ourselves against the remaining complaints and any appeal of any prior
settlements.





Allegheny Energy Supply
(“Allegheny”), the sole customer of coal produced at our subsidiary Wolf Run
Mining Company’s (“Wolf Run”) Sycamore No. 2 mine, filed a lawsuit against
Wolf Run, Hunter Ridge Holdings, Inc. (“Hunter Ridge”), and us in state court in
Allegheny County, Pennsylvania on December 28, 2006, and amended its
complaint on April 23, 2007. Allegheny claims that we breached a coal
supply contract when we declared force majeure under the contract upon idling
the Sycamore No. 2 mine in the third quarter of 2006. The Sycamore
No. 2 mine was idled after encountering adverse geologic conditions and
abandoned gas wells that were previously unidentified and unmapped. The amended
complaint also alleges that the production stoppages constitute a breach of the
guarantee agreement by Hunter Ridge and breach of certain representations made
upon entering into the contract in early 2005, a claim that Allegheny has since
voluntarily dropped. Allegheny claims that it will incur costs in excess of
$100.0 million to purchase replacement coal over the life of the contract. We,
Wolf Run and Hunter Ridge answered the amended complaint on August 13, 2007,
disputing all of the remaining claims. On November 3, 2008, we, Wolf Run and
Hunter Ridge filed an amended answer and counterclaim against the
plaintiffs seeking to void the coal supply agreement due to, among other things,
fraudulent inducement and conspiracy. The counterclaim alleges further that
Allegheny breached a confidentiality agreement with Hunter Ridge, which
prohibited the solicitation of its employees. After the coal supply agreement
was executed, Allegheny hired the then-president of Anker Coal Group, Inc. (now
Hunter Ridge) who engaged in negotiations on behalf of Wolf Run and Hunter
Ridge. In addition to seeking a declaratory judgment that the coal supply
agreement and guaranty be deemed void and unenforceable and rescission of the
contracts, the counterclaim also seeks compensatory and punitive
damages.





38







On
December 6, 2007, the Kentucky Waterways Alliance, Inc., and The Sierra
Club sued the U.S. Army Corps of Engineers (the “ACOE”) in the United States
District Court for the Western District of Kentucky, Louisville Division,
asserting that a permit to construct five valley fills was issued unlawfully to
our Hazard subsidiary for its Thunder Ridge Surface mine. The suit alleges that
the ACOE failed to comply with the requirements of both Section 404 of the
Clean Water Act and the National Environmental Policy Act. Hazard intervened in
the suit to protect our interests. The ACOE suspended the Section 404
permit on December 26, 2007 in order to evaluate the issues raised by the
plaintiffs. The ACOE completed its evaluation on March 25, 2009. Only a day
prior, the U.S. Environmental Protection Agency (the “EPA”) stated its intention
to more closely scrutinize Section 404 permitting decisions by the ACOE. On
March 27, 2009, the ACOE reinstated Hazard’s permit. Pursuant to earlier
agreements with the plaintiffs in the litigation, we provided thirty (30) days
notice to plaintiffs’ counsel of Hazard’s intent to proceed with activities
authorized under the permit. After such notice, the plaintiffs have agreed to
amend the earlier agreement to allow Hazard partial use of the reinstated
permit, including construction of an additional valley fill, thus delaying the
plaintiffs’ move to seek a temporary restraining order and subsequent injunction
to block Hazard’s use of the permit. If the court ultimately finds that the
permit is unlawful, production could be materially affected at the Thunder Ridge
Surface mine. The EPA’s heightened scrutiny will likely render the process of
obtaining ACOE permits for coal mining activities in Appalachia more
difficult.





On
January 7, 2008, Saratoga Advantage Trust filed a class action lawsuit in
the U.S. District Court for the Southern District of West Virginia against us
and certain of our officers and directors. The complaint asserts claims under
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder, based on alleged false and misleading statements
in the registration statements filed in connection with our November 2005
reorganization and December 2005 public offering of common stock. In addition,
the complaint challenges other of our public statements regarding our operating
condition and safety record. We intend to vigorously defend the
action.





On
July 3, 2007, Taylor Environmental Advocacy Membership, Inc. (“T.E.A.M.”) filed
a petition to appeal the issuance of ICG Tygart Valley, LLC’s (“Tygart Valley”)
Surface Mine Permit U-2004-06 against the West Virginia Department of
Environmental Protection (the “WVDEP”) in an action before the West Virginia
Surface Mine Board (the “Board”). On December 10, 2007, the Board remanded the
permit to the WVDEP for revision to certain provisions related to pre-mining
water monitoring and cumulative hydrologic impacts. The WVDEP issued a
modification on April 1, 2008 addressing those issues. T.E.A.M. filed an appeal
of the WVDEP’s approval of the permit modification on April 30, 2008. On October
7, 2008, the Board issued an order remanding the permit to the WVDEP requiring
Tygart Valley to address a technical issue related to projected post-mining
water quality. Tygart Valley has prepared and submitted a permit modification to
alleviate the Board’s concerns. All site development has been suspended until
the WVDEP has approved the permit modification. If the WVDEP issues the
permit as modified, there will be additional opportunity for appeal by
T.E.A.M.





In
addition, from time to time, we are involved in legal proceedings arising in the
ordinary course of business. These proceedings include assessments of penalties
for citations and orders asserted by MSHA and other regulatory agencies, none of
which are expected by management to, individually or in the aggregate, have a
material adverse effect on us. In the opinion of management, we have recorded
adequate reserves for liabilities arising in the ordinary course and it is
management’s belief there is no individual case or group of related cases
pending that is likely to have a material adverse effect on our financial
condition, results of operations or cash flows.





Item 1A.
            Risk
      Factors





There
have been no material changes in the risk factors that were disclosed in our
Annual Report on Form 10-K/A for the fiscal year ended December 31,
2008.








39








Item 2.
            Unregistered
      Sales of Securities and Use of
Proceeds





There
were no unregistered sales of equity securities during the three months ended
March 31, 2009.





ISSUER
      PURCHASES OF EQUITY SECURITIESPeriod
            
            Total
      Number of Shares Purchased (1)
            
            Average
      Price Paid per Share(1)
            
            Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
            
            Approximate
      Dollar Value of Shares that May Yet be Purchased Under the Plans or
      ProgramsJanuary
      1, 2009 through January 31, 2009
            
            —
            
            $
            —
            
            —
            
            —February
      1, 2009 through February 28, 2009
            
            —
            
            
            —
            
            —
            
            —March
      1, 2009 through March 31, 2009
            
            4,768
            
            
            1.76
            
            —
            
            —Total
            
            4,768
            
            $
            1.76
            
            —
            
            —







(1)
            During
      the three months ended March 31, 2009, we withheld 4,768 shares of common
      stock from employees to satisfy estimated tax obligations upon the vesting
      of restricted stock under the terms of our 2005 Equity and Performance
      Incentive Plan. The value of the common stock that was withheld was based
      upon the closing price of our common stock on the applicable vesting
      dates.








40








Item 6.
            Exhibits





10-Q/A EXHIBIT
INDEX





2.1
            
            Business
      Combination Agreement among International Coal Group, Inc. (n/k/a ICG,
      Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), ICG Merger
      Sub, Inc., Anker Merger Sub, Inc. and Anker Coal Group, Inc., dated as of
      March 31, 2005
            
            (A
            )2.2
            
            First
      Amendment to the Business Combination Agreement among International Coal
      Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal
      Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal
      Group, Inc., dated as of May 10, 2005
            
            (A
            )2.3
            
            Second
      Amendment to the Business Combination Agreement among International Coal
      Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal
      Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc. and Anker Coal
      Group, Inc., effective as of June 29, 2005
            
            (B
            )2.4
            
            Business
      Combination Agreement among International Coal Group, Inc. (n/k/a ICG,
      Inc.), ICG Holdco, Inc. (n/k/a International Coal Group, Inc.), CoalQuest
      Merger Sub LLC, CoalQuest Development LLC and the members of CoalQuest
      Development LLC, dated as of March 31, 2005
            
            (A
            )2.5
            
            First
      Amendment to the Business Combination Agreement among International Coal
      Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal
      Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the
      members of CoalQuest Development LLC, dated as of May 10,
    2005
            
            (A
            )2.6
            
            Second
      Amendment to the Business Combination Agreement among International Coal
      Group, Inc. (f/k/a ICG Holdco, Inc.), ICG, Inc. (f/k/a International Coal
      Group, Inc.), CoalQuest Merger Sub LLC, CoalQuest Development LLC and the
      members of CoalQuest Development LLC, effective as of June 29,
      2005
            
            (B
            )3.1
            
            Form
      of Second Amended and Restated Certificate of Incorporation of
      International Coal Group, Inc.
            
            (E
            )3.2
            
            Form
      of Second Amended and Restated By-laws of International Coal Group,
      Inc.
            
            (F
            )4.1
            
            Form
      of certificate of International Coal Group, Inc. common
    stock
            
            (C
            )4.2
            
            Registration
      Rights Agreement by and between International Coal Group, Inc., WLR
      Recovery Fund II, L.P., Contrarian Capital Management LLC, Värde Partners,
      Inc., Greenlight Capital, Inc., and Stark Trading, Shepherd International
      Coal Holdings Inc.
            
            (A
            )4.4
            
            Indenture,
      dated June 23, 2006, by and among ICG, the guarantors party thereto
      and The Bank of New York Trust Company, N.A., as trustee
            
            (G
            )4.5
            
            Form
      of 10.25% Note
            
            (G
            )4.6
            
            Indenture,
      dated July 31, 2007, by and among ICG, the guarantors party thereto
      and The Bank of New York Trust Company, N.A., as trustee
            
            (J
            )4.7
            
            Form
      of Senior Convertible 9.00% Note
            
            (J
            )4.8
            
            Registration
      Rights Agreement, dated July 31, 2007, by and among ICG, the guarantors
      party thereto and UBS Securities LLC
            
            (J
            )4.9
            
            Registration
      Rights Agreement dated as of May 16, 2008 by and between ICG and Fairfax
      Financial Holdings Limited
            
            (K
            )10.1
            
            Amendment
      No. 1 to the Second Amended and Restated Credit Agreement, dated as of
      January 31, 2007, among ICG, LLC, as borrower, International Coal Group,
      Inc. and certain of its subsidiaries as guarantors, the lenders party
      thereto, J.P. Morgan Chase Securities Inc. and UBS Securities LLC, as
      joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A. and
      CIT Capital USA Inc., as co-syndication agents, Bank of America, N.A. and
      Wachovia Bank, N.A., as co-documentation agents, JPMorgan Chase Bank and
      Bank of America, N.A., as issuing banks, UBS Loan Finance LLC, as
      swingline lender, and UBS AG, Stamford Branch, as issuing bank, as
      administrative agent and as collateral agent for the
    lenders
            
            (H
            )


41











10.2
            
            Second
      Amendment and Limited Waiver to Second Amended and Restated Credit
      Agreement, effective as of July 31, 2007, by and among ICG, LLC, as
      borrower, the guarantors party thereto, the lenders party thereto, J.P.
      Morgan Securities Inc. and UBS Securities LLC, as joint lead arrangers and
      joint bookrunners, JPMorgan Chase Bank, N.A. and CIT Capital Securities
      LLC, as co-syndication agents, Bank of America, N.A. and Wachovia Bank,
      N.A. as co-documentation agents, JPMorgan Chase Bank, N.A. as an issuing
      bank, UBS Loan Finance LLC, as swingline lender, and UBS AG, Stamford
      Branch, as an issuing bank, administrative agent and collateral
      agent
            
            (J
            )10.3
            
            Amendment
      No. 3 to the Second Amended and Restated Credit Agreement, dated as of
      February 20, 2009, among ICG, LLC, as borrower, International Coal Group,
      Inc. and certain of its subsidiaries as guarantors, the lenders party
      thereto, J.P. Morgan Chase Securities Inc. and UBS Securities LLC, as
      joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A. and
      CIT Capital USA Inc., as co-syndication agents, Bank of America, N.A. and
      Wachovia Bank, N.A., as co-documentation agents, JPMorgan Chase Bank and
      Bank of America, N.A., as issuing banks, UBS Loan Finance LLC, as
      swingline lender, and UBS AG, Stamford Branch, as issuing bank, as
      administrative agent and as collateral agent for the
    lenders
            
            (M
            )31.1
            
            Certification
      of the Principal Executive Officer
            
            (D
            )31.2
            
            Certification
      of the Principal Financial Officer
            
            (D
            )32.1
            
            Certification
      Pursuant to §906 of the Sarbanes Oxley Act of 2002
            
            (D
            )








(A)
            
            Previously
      filed as an exhibit to Amendment No. 1 to International Coal Group,
      Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393),
      filed on June 15, 2005 and incorporated herein by
      reference.(B)
            
            Previously
      filed as an exhibit to Amendment No. 2 to International Coal Group,
      Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393),
      filed on June 30, 2005 and incorporated herein by
      reference.(C)
            
            Previously
      filed as an exhibit to Amendment No. 3 to International Coal Group,
      Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393),
      filed on September 28, 2005 and incorporated herein by
      reference.(D)
            
            Filed
      herewith.(E)
            
            Previously
      filed as an exhibit to Amendment No. 4 to International Coal Group,
      Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393),
      filed on October 24, 2005.(F)
            
            Previously
      filed as an exhibit to Amendment No. 5 to International Coal Group,
      Inc.’s Registration Statement on Form S-1 (Reg. No. 333-124393),
      filed on November 9, 2005.(G)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Current Report on
      Form 8-K filed on June 26, 2006.(H)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Annual Report on
      Form 10-K for the year ended December 31, 2006 filed on March 1,
      2007.(I)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Quarterly Report
      on Form 10-Q for the quarter ended March 31, 2007 filed on
      May 8, 2007.(J)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Current Report on
      Form 8-K filed on July 31, 2007.(K)
            
            Previously
      filed as an exhibit to Fairfax Financial Holdings Limited’s Amendment No.
      1 to Form Schedule 13D filed on May 29, 2008.(L)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2008 filed on August 8,
      2008.(M)
            
            Previously
      filed as an exhibit to International Coal Group, Inc.’s Annual Report on
      Form 10-K for the year ended December 31, 2008 filed on February 27,
      2009.





42













SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





INTERNATIONAL
      COAL GROUP, INC.By:
            
            /s/
      Bennett K. HatfieldName:
            
            Bennett
      K. HatfieldTitle:
            
            President, Chief Executive Officer and Director(Principal
      Executive Officer)By:
            
            /s/
      Bradley W. HarrisName:
            
            Bradley
      W. HarrisTitle:
            
            Senior
      Vice President, Chief Financial Officer and Treasurer(Principal
      Financial Officer)










Date:
December 18,
2009





43