form052610.htm

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
___________________
 
FORM 11-K

FOR ANNUAL REPORTS OF EMPLOYEE STOCK
PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
___________________
 
(Mark One):
 
ý           ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

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

For the transition period from _____ to ______

Commission File Number:  1-7775

A.  Full title of plan and the address of the plan, if different from that of the issuer named below:
 
COAL COMPANY SALARY DEFERRAL
AND PROFIT SHARING PLAN
 

 
B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
Massey Energy Company
4 North 4th Street
Richmond, Virginia 23219
 
REQUIRED INFORMATION


Financial Statements.  The following financial statements and schedules are filed as part of this annual report and appear immediately after the signature page hereof:
 
 
·  
Statements of Net Assets Available for Benefits
 
·  
Statement of Changes in Net Assets Available for Benefits
 
·  
Notes to Financial Statements
 
·  
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
 
Exhibits.  The following exhibit is filed as part of this annual report:

·  
Exhibit 23.1 – Consent of Keiter, Stephens, Hurst, Gary & Shreaves, P.C.
 
SIGNATURES


The Plan.  Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

COAL COMPANY SALARY DEFERRAL
AND PROFIT SHARING PLAN
 
By: A.T. MASSEY COAL COMPANY, INC.
Its: Named Fiduciary
 
By: /s/ John M. Poma
John M. Poma
Vice President and Chief Administrative Officer
Named Fiduciary’s Designee
Dated:  May 26, 2010


 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
 
Financial Statements and Supplemental Schedule
 
As of December 31, 2009 and 2008, and for the Year ended December 31, 2009
with Report of Independent Registered Public Accounting Firm
 
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN

Financial Statements and Supplemental Schedule
As of December 31, 2009 and 2008 and for the Year ended December 31, 2009
 
Contents
 

 

Report of Independent Registered Public Accounting Firm
     1  
         
Financial Statements
        
         
Statements of Net Assets Available for Benefits
     2  
Statement of Changes in Net Assets Available for Benefits
     3  
Notes to Financial Statements
     4  
         
Supplemental Information
        
         
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
     10  


Report of Independent Registered Public Accounting Firm

To the Administrator of the
Coal Company Salary Deferral and Profit Sharing Plan


We have audited the accompanying statements of net assets available for benefits of the Coal Company Salary Deferral and Profit Sharing Plan (the “Plan”) as of December 31, 2009 and 2008 and the related statement of changes in net assets available for benefits for the year ended December 31, 2009.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2009 and 2008, and the changes in its net assets available for benefits for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States.

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole.  The accompanying supplemental schedule is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.


/s/ Keiter, Stephens, Hurst, Gary & Shreaves, P.C.
Glen Allen, Virginia
May 26, 2010
 
 
 
 
1
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2009 and 2008


   
2009
    
2008
  
Assets
            
Cash    $ -           $ 50,665   
Investments, at fair value
     172,275,777       132,613,260  
                 
Total assets
     172,275,777       132,663,925  
                 
Liabilities
                
Excess contribution liability
     190,382       73,049  
                 
Total liabilities
     190,382       73,049  
                 
Net assets reflecting investments at fair value
     172,085,395       132,590,876  
                 
Adjustment from fair value to contract value for fully
                
benefit-responsive investment contracts
     (1,189,028 )     2,433,020  
                 
Net assets available for benefits
   $ 170,896,367     $ 135,023,896  



See Notes to Financial Statements
 
2
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2009


Additions:
      
Investment income:
      
Dividends and interest, net of investment management fees
   $ 4,184,219  
Net appreciation in fair value of investments
     31,250,385  
         
Total investment income
     35,434,604  
         
Contributions:
        
Participants
     15,144,508  
Employer
     2,713,609  
         
Total contributions
     17,858,117  
         
Total additions
     53,292,721  
         
Deductions:
        
Distributions to participants
     (17,420,251 )
         
Net increase
     35,872,471  
         
Net assets available for benefits:
        
Beginning of year
     135,023,896  
         
End of year
   $ 170,896,367  



See Notes to Financial Statements

3
 
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
 
Note 1.              Description of Plan

The following description of the Coal Company Salary Deferral and Profit Sharing Plan dated February 27, 2002, as amended (the Plan), provides only general information.  Participants should refer to the Plan’s governing documents for a more complete description of the Plan’s provisions and definitions of certain capitalized terms not defined herein.

General:  The Plan is a contributory defined contribution plan established effective January 1, 1985 (restated effective October 1, 2001) by A.T. Massey Coal Company, Inc. (the Company or the Plan Sponsor), which is a wholly owned subsidiary of Massey Energy Company and is administered by the Company for the benefit of eligible employees of the Company and certain of its directly and indirectly owned subsidiaries.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Participation:  Eligible employees may begin participation on any date after hire.

Participant Accounts:  Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings, net of fund management fees.   Allocations of earnings are based on participant account balances within each fund.  Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account balance.

Upon enrollment in the Plan, participants may direct their investments to any of the Plan’s fund options.  Participants may change their investment options daily.  Certain funds may impose repurchase restrictions ranging from 30 to 60 days.

Contributions:  Participants may elect to defer up to 75% of their eligible compensation, as defined by the Plan and as limited by restrictions of the Internal Revenue Code.  Prior to May 1, 2009, the Company contributed an amount equal to 30% of the first 10% of each participant’s compensation contributed to the Plan.  Effective May 1, 2009, the Company reduced the fixed matching contribution to an amount equal to 10% of the first 10% of each participant’s compensation contributed to the Plan.

The Company also may contribute a discretionary amount to the Plan each year as determined by the Plan Sponsor’s management.  No discretionary contributions were made during the Plan years ended December 31, 2009 and 2008.

Vesting:  Participants are vested immediately in their contributions plus actual earnings thereon.  The Matching Account for a participant who was an employee on September 30, 2001, is fully vested and nonforfeitable at all times.  The Discretionary Matching Account and Matching Account for an individual who was hired on or after October 1, 2001 shall become fully vested if the participant dies or reaches his Normal Retirement Age while employed by the Plan Sponsor or any of its participating subsidiaries;   otherwise, such participant shall vest 20% after two years of service and then shall vest 20% each year after the first two years until fully vested.

Distribution:  Participants may obtain distributions from their accounts upon termination of employment, retirement, upon reaching age 59½, or by incurring a disability or hardship, as defined by the Plan.  Designated beneficiaries are entitled to receive the participant’s unpaid benefits upon the death of the participant.  Distributions must be in a form and medium prescribed by the Plan document.

Loans to Participants:  Effective December 31, 2001, the provision to grant new loans to participants was eliminated.  Prior to that date, loans were made from the participant’s account and secured by the participant’s remaining account balance.  Participants were permitted to borrow from their accounts a minimum of $1,000 and a maximum equal to the lesser of 50% of the participant’s account or $50,000 in accordance with the Department of Labor’s regulations on loans to participants.  Loans bear interest ranging from 9% to 11.5% and must be repaid over a period not to exceed 5 years unless the loan was used to purchase the participant’s primary residence, in which case the loan term may not exceed 10
 
4
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
 
years.  Principal and interest is paid ratably through regular payroll deductions.  Loans to terminated participants and loans in default are treated as distributions to the participant.

Plan Amendment and Termination:  Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to amend or terminate the Plan subject to the provisions of ERISA.  In the event of Plan termination, participants would become 100% vested in their employer contributions.

Administrative Expenses:  Expenses of the Plan, excluding investment management fees that are netted against fund earnings, are paid by the Plan Sponsor.


Note 2.              Summary of Accounting Policies

Use of Estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires the Plan Sponsor’s management to make estimates that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.

Investment Valuation and Income Recognition:  The Plan’s investments are stated at fair value, which equals the quoted market price on the last day of the year.  However, the Invesco Stable Value Trust is stated at contract value, as required by current accounting guidance.  Contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.  Participant loans are valued at their outstanding balances, which approximate fair value.  Securities transactions are recorded as of the trade date.  Interest income is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.

Fair Value Measurements:  Assets and liabilities that are required to be measured at fair value are categorized based upon the levels of judgment associated with the inputs used to measure their fair value.  See Note 4 to the Notes to Financial Statements for more information.

Payment of Benefits:  Benefits are recorded when paid.

Subsequent Events:  The Plan Sponsor’s management has evaluated subsequent events through the date the financial statements were issued.

5
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
 
Note 3.              Investments

All of the Plan’s investments are held in a trust fund administered by the Trustee (as defined within the Plan document).  At December 31, 2009 and 2008, investments in each fund (including short-term investments allocated to such funds) consisted of the following:

   
December 31,
  
   
2009
    
2008
  
Invesco Stable Value Trust
   $ 59,285,228 *   $ 48,814,945 *
American Funds Fundamental Investors A
     25,684,021 *     19,214,502 *
Oppenheimer Strategic Income Fund
     23,700,980 *     20,148,965 *
American Funds American Balanced A
     22,006,289 *     20,545,268 *
Massey Energy Company Stock Fund
     19,881,152 *     7,174,477 *
AIM Constellation A
     9,312,124 *     8,227,675 *
Vanguard S&P 500 Index
     6,777,340       4,946,729  
Allianz Funds OCC Renaissance Fund A
     4,944,483       3,368,090  
Thornburg International Value
     670,095       141,189  
Participant Loans
     14,064       31,420  
    $ 172,275,777     $ 132,613,260  
                 
* Investment represents 5% or more of the Plan's net assets.
          

The Invesco Stable Value Trust is presented in the financial statements at contract value, as reported to the Plan by the Trustee.  Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.  Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise.  If an event occurs that may impair the ability of the contract issuer to perform in accordance with the contract terms, fair value may be less than contract value. The market value yield to the fund was 3.10% and the crediting interest rate to the fund was 3.89% for the year ended December 31, 2009.

At December 31, 2009 and 2008, Plan investments included forfeiture balances of $272,082 and $235,669, respectively, which were invested in the Invesco Stable Value Trust.  Forfeitures amounted to $619,207 in 2009.

During 2009, the Plan’s investments, excluding the Invesco Stable Value Trust and Participant Loans, (including investments purchased and sold, as well as held during the year) appreciated in value by $31,250,385 as follows:

   
Year Ended
  
     December 31, 2009  
       
American Funds Fundamental Investors A
   $ 5,757,148  
Oppenheimer Strategic Income Fund
     2,765,443  
American Funds American Balanced A
     3,105,552  
Massey Energy Company Stock Fund
     15,516,473  
AIM Constellation A
     1,560,779  
Vanguard S&P 500 Index
     1,315,492  
Allianz Funds OCC Renaissance Fund A
     1,134,246  
Thornburg International Value
     95,251  
    $ 31,250,385  

6
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
 
Note 4.              Fair Value Measurements

Assets and liabilities that are required to be measured at fair value are categorized based upon the levels of judgment associated with the inputs used to measure their fair value.  Current accounting guidance provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
 
 
   Level 1     Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
       
   Level 2   Inputs to the valuation methodology include:
       
       ·  Quoted prices for similar assets or liabilities in active markets;
       
       ·  Quoted prices for identical or similar assets or liabilities in inactive markets;
       
       ·  Inputs other than quoted prices that are observable for the asset or liability
       
       ·  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
       
      If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability
       
   Level 3   Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value:

Mutual funds:  Valued at the net asset value (NAV) of shares held by the Plan at year end.

Common/collective trust:  Valued daily at the NAV of shares or units held by the Plan based on quoted market value of the underlying assets.

Common stock:  Valued at the closing price reported on the active market on which the individual securities are traded.

Participant loans:  Valued at amortized cost, which approximates fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
 
7
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
The following tables set forth, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2009 and 2008, by level:

   
December 31, 2009
  
   
Level 1
    
Level 2
    
Level 3
    
Total
  
Mutual Funds:
                        
Growth
   $ 39,940,629     $ -     $ -     $ 39,940,629  
Balanced
     22,006,289       -       -       22,006,289  
Index
     6,777,340       -       -       6,777,340  
Other
     24,371,075       -       -       24,371,075  
Common/Collective Trust
     -       59,285,228       -       59,285,228  
Common Stock
     19,881,152       -       -       19,881,152  
Participant Loans
     -       -       14,064       14,064  
Total assets at fair value
   $ 112,976,485     $ 59,285,228     $ 14,064     $ 172,275,777  
                                 
   
December 31, 2008
  
   
Level 1
    
Level 2
    
Level 3
    
Total
  
Mutual Funds:
                                
Growth
   $ 30,810,267     $ -     $ -     $ 30,810,267  
Balanced
     20,545,268       -       -       20,545,268  
Index
     4,946,729       -       -       4,946,729  
Other
     20,290,154       -       -       20,290,154  
Common/Collective Trust*
     -       48,814,945       -       48,814,945  
Common Stock
     7,174,477       -       -       7,174,477  
Participant Loans
     -       -       31,420       31,420  
Total assets at fair value
   $ 83,766,895     $ 48,814,945     $ 31,420     $ 132,613,260  
                                 
* Amounts from previously reported financial statements have been reclassified.
          

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
   
Participant
  
   
Loans
  
Balance at December 31, 2008
   $ 31,420  
Purchases, issuances, sales and settlements
     (17,356 )
Balance at December 31, 2009
   $ 14,064  

 
Note 5.              Related Party Transactions

Certain Plan assets are invested in common stock of the Plan Sponsor or in funds sponsored by the Trustee.  Transactions involving these instruments are considered to be party-in-interest transactions for which statutory exemption exists under the Department of Labor Regulations.
 

Note 6.              Tax Status

The Internal Revenue Services has determined and informed the Plan Sponsor by a letter dated April 28, 2003, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC).  The letter also states that the Plan is qualified under Section 401(a) of the IRC and, therefore, the related trust is exempt from taxation.  Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
8
 
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
 
Note 7.              Risks and Uncertainties

The Plan invests in various investment securities.  Investment securities are exposed to various risks, such as interest rate, market, and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
 
9
COAL COMPANY SALARY DEFERRAL AND PROFIT SHARING PLAN
SUPPLEMENTARY INFORMATION
EIN:  54-0295165
PLAN:  002
 
SCHEDULE H, LINE 4i -- SCHEDULE OF ASSETS (HELD AT YEAR END)
December 31, 2009
     
(c)
            
   
(b)
Description of investment including
            
   
Identity of issue, borrower,
maturity date, rate of interest, collateral,
  
(d)
    
(e)
  
(a)
  
lessor or similar party
par or maturity value
  
Cost
    
Current Value
  
                   
   
Common/Collective Trust:
              
  *  
     Invesco
Stable Value Trust - 59,285,228 shares
     **     $ 59,285,228  
                         
     
Total Common/Collective Trust
               59,285,228  
                         
     
Registered Investment Companies:
                  
     
     American Funds
Fundamental Investors A - 785,124 shares
     **       25,684,021  
     
     Oppenheimer
Strategic Fund A - 6,004,317 shares
     **       23,700,980  
     
     American Funds
American Balanced A - 1,358,453 shares
     **       22,006,289  
     
     AIM Investments
Constellation A - 460,757 shares
     **       9,312,124  
     
     Vanguard
500 Index - 66,110 shares
     **       6,777,340  
     
     Allianz Funds
OCC Renaissance Fund A - 357,692 shares
     **       4,944,483  
     
     Thornburg
International Value - 26,477 shares
     **       670,095  
                         
     
Total Registered Investment Companies
               93,095,333  
                         
     
Common Stock Fund:
                  
  *  
     Massey Energy Company
Massey Energy Company - 435,532 shares
     **       19,881,152  
                         
  *  
Participant Loans
Interest rates range from 9% to 11.5%; various
               
        maturity dates through June 30, 2011             14,064   
                         
     
Adjustment from fair value to contract value
                  
     
for fully benefit-responsive investment contracts
               (1,189,028 )
                         
     
Grand Total
             $ 171,086,749  
                         
                         
  *  
Party-In-Interest
                  
**  
Historical cost is not required as all investments are participant directed.
 
 
 
 
                
 
10