And with that, I'll turn the call over to Mike.Michael C. Crews Well, thanks, Vic, and good morning, everyone. In the first quarter, Peabody delivered higher revenue, EBITDA, operating profit and cash flows, driven by increased contributions from both U.S. and Australian operations. That's a strong start to 2012 in spite of Australian weather issues and some challenging U.S. market conditions. Let's review the quarterly results, beginning with the income statement. First quarter revenues rose 17% to $2 billion on increased Australian volumes and higher pricing in both the U.S. and Australia. Rising revenues led to an 18% increase in first quarter EBITDA to $513 million, even with approximately $41 million in weather impacts from Australia flooding that affected costs and reduced sales by approximately 260,000 tons. Impacts were limited to the first quarter, and some of the lower volumes should be recouped in the second quarter. Diluted earnings per share totaled $0.64 with adjusted diluted earnings per share of $0.67. This came in at the upper end of our original targets given reduced DD&A both from lower volumes and a production mix favoring lower DD&A operations, along with a slightly lower tax rate. Compared with the prior year, earnings per share reflect higher operating profit, net of increased interest expense. We look for DD&A to normalize as we increase volumes from the Australia platform throughout the year. Our effective tax rate was 25% for the quarter, and we now expect the full year effective tax rate to be in the mid-20% range. I'll now turn to the additional detail within our supplemental data. Australia sales volumes totaled 6.6 million tons in the quarter, an 18% increase over the prior year due to new and expanded operations. Australian average realized pricing increased 27% to $130 per short ton due to higher realizations on both met and thermal products.
During the quarter, our mixed adjusted average pricing was $188 per short ton for met coal and $100 per short ton for seaborne thermal coal. We shipped 2.9 million tons of met coal and sold 2.6 million tons of seaborne thermal coal in the quarter, with the remaining 1.1 million tons in domestic thermal products.Our Australia cost of $85 per ton reflect the anticipated change of mix related to our acquired operations, a higher percentage of met coal in the sales mix and a higher -- and higher exchange rates. The weather also impacted costs by $6 per ton in the first quarter, and we continue to target Australian costs to be in the upper 70s per ton range for full year 2012. Overall, Australia margins expanded 20% over the prior year to $45 per ton. U.S. sales volume was largely in line with the prior year. If you recall, we started the year with a fully priced book of business, and the team did a good job of shipping on those contracts. Realized prices were up over the prior year in both the Western and Midwestern U.S., while overall U.S. cost -- overall cost increases were held at just 6%, leading to a 12% increase in gross margin per ton. Our U.S. margin improvement was notable given the major industry pressures in the quarter. EBITDA from both Australia and U.S. mining operations increased in the quarter, and Trading and Brokerage EBITDA also rose 5% on growing international operations. Peabody had another strong quarter for operating cash flow, which rose almost 80% to $395 million. Our ending cash balance for the quarter totaled $952 million. Capital spending was $239 million, and we reduced our 2012 capital spending target by $100 million to $1.1 billion to $1.3 billion to account for the current market environment. This includes sustaining capital of $1.25 to $1.75 per ton of production with most of the remainder associated with the expansion projects in Australia. Read the rest of this transcript for free on seekingalpha.com