Supplemental Consolidating Financial Information

Pursuant to the indentures governing Arch Coal, Inc.’s senior notes, certain wholly-owned subsidiaries of the Company have fully and unconditionally guaranteed the senior notes on a joint and several basis. The following tables present consolidating financial information for (i) the Company, (ii) the issuer of the senior notes, (iii) the guarantors under the senior notes, and (iv) the entities which are not guarantors under the senior notes (Arch Receivable Company, LLC and the Company’s subsidiaries outside the United States):

Condensed Consolidating Statements of Operations and Comprehensive Income

Year Ended December 31, 2014



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	2,937,119		$	—		$	—		$	2,937,119
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	3,016			2,566,572			—			(3,395		)	2,566,193
Depreciation, depletion and amortization	5,154			413,559			35			—			418,748
Amortization of acquired sales contracts, net	—			(13,187		)	—			—			(13,187		)
Change in fair value of coal derivatives and coal trading activities, net	—			(3,686		)	—			—			(3,686		)
Asset impairment and mine closure costs	3,642			20,471			—			—			24,113
Selling, general and administrative expenses	79,902			29,739			6,626			(2,044		)	114,223
Other operating income, net	(4,480		)	(15,726		)	(4,987		)	5,439			(19,754		)
	87,234			2,997,742			1,674			—			3,086,650
Loss from investment in subsidiaries	(13,085		)	—			—			13,085			—
Loss from operations	(100,319		)	(60,623		)	(1,674		)	13,085			(149,531		)
Interest expense, net
Interest expense	(463,823		)	(26,137		)	(4,259		)	103,273			(390,946		)
Interest and investment income	31,389			74,511			5,131			(103,273		)	7,758
	(432,434		)	48,374			872			—			(383,188		)

Loss from continuing operations before income taxes	(532,753		)	(12,249		)	(802		)	13,085			(532,719		)
Provision for (benefit from) income taxes	25,600			—			34			—			25,634
Net loss	(558,353		)	(12,249		)	(836		)	13,085			(558,353		)
Total comprehensive loss	$	(592,804	)	$	(34,439	)	$	(836	)	$	35,275		$	(592,804	)

Condensed Consolidating Statements of Operations and Comprehensive Income

Year Ended December 31, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	3,014,357		$	—		$	—		$	3,014,357
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	9,117			2,657,583			—			(3,564		)	2,663,136
Depreciation, depletion and amortization	5,949			420,458			35			—			426,442
Amortization of acquired sales contracts, net	—			(9,457		)	—			—			(9,457		)
Change in fair value of coal derivatives and coal trading activities, net	—			7,845			—			—			7,845
Asset impairment and mine closure costs	78,150			142,729			—			—			220,879
Goodwill impairment	—			265,423			—			—			265,423
Selling, general and administrative expenses	88,820			39,825			7,038			(2,235		)	133,448
Other operating income, net	4,209			(34,856		)	(5,370		)	5,799			(30,218		)
	186,245			3,489,550			1,703			—			3,677,498
Loss from investment in subsidiaries	(328,889		)	—			—			328,889			—
Loss from operations	(515,134		)	(475,193		)	(1,703		)	328,889			(663,141		)
Interest expense, net
Interest expense	(449,614		)	(24,747		)	(4,214		)	97,308			(381,267		)
Interest and investment income	30,285			68,248			5,378			(97,308		)	6,603
	(419,329		)	43,501			1,164			—			(374,664		)

Net loss resulting from early retirement and refinancing of debt	(42,921		)	—			—			—			(42,921		)
Loss from continuing operations before income taxes	(977,384		)	(431,692		)	(539		)	328,889			(1,080,726		)
Provision for (benefit from) income taxes	(335,552		)	—			54			—			(335,498		)
Loss from continuing operations	(641,832		)	(431,692		)	(593		)	328,889			(745,228		)
Income from discontinued operations, including gain on sale - net of tax	—			103,396			—			—			103,396
Net loss	$	(641,832	)	$	(328,296	)	$	(593	)	$	328,889		$	(641,832	)
Total comprehensive loss	$	(587,633	)	$	(304,278	)	$	(593	)	$	304,871		$	(587,633	)

Condensed Consolidating Statements of Operations and Comprehensive Income

Year Ended December 31, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	3,768,126		$	—		$	—		$	3,768,126
Costs, expenses and other													—
Cost of sales (exclusive of items shown separately below)	10,921			3,144,178			—			—			3,155,099
Depreciation, depletion and amortization	5,392			486,786			33			—			492,211
Amortization of acquired sales contracts, net	—			(25,189		)	—			—			(25,189		)
Change in fair value of coal derivatives and coal trading activities, net	—			(16,590		)	—			—			(16,590		)
Asset impairment and mine closure costs	—			539,182			—			—			539,182
Goodwill impairment	—			330,680			—			—			330,680
Contract settlement resulting from Patriot Coal bankruptcy	—			58,335			—			—			58,335
Reduction in accrual related to acquired litigation	—			(79,532		)	—			—			(79,532		)
Selling, general and administrative expenses	84,199			44,363			8,785			(3,048		)	134,299
Other operating income, net	(13,392		)	(39,209		)	(13,804		)	3,048			(63,357		)
	87,120			4,443,004			(4,986		)	—			4,525,138
Loss from investment in subsidiaries	(589,665		)	—			—			589,665			—
Income (loss) from operations	(676,785		)	(674,878		)	4,986			589,665			(757,012		)
Interest expense, net
Interest expense	(366,584		)	(34,849		)	(3,221		)	87,039			(317,615		)
Interest and investment income	27,750			57,268			7,494			(87,039		)	5,473
	(338,834		)	22,419			4,273			—			(312,142		)
Other non-operating expense
Net loss resulting from early retirement of debt	(21,975		)	(1,693		)	—			—			(23,668		)

Income (loss) from continuing operations before income taxes	(1,037,594		)	(654,152		)	9,259			589,665			(1,092,822		)
Provision for (benefit from) income taxes	(353,907		)	—			—			—			(353,907		)
Income (loss) from continuing operations	(683,687		)	(654,152		)	9,259			589,665			(738,915		)
Income from discontinued operations, net of tax	—			55,228			—			—			55,228
Net Income (loss)	(683,687		)	(598,924		)	9,259			589,665			(683,687		)
Less: Net income attributable to noncontrolling interest	(268		)	—			—			—			(268		)
Net Income (loss) attributable to Arch Coal, Inc.	$	(683,955	)	$	(598,924	)	$	9,259		$	589,665		$	(683,955	)
Total comprehensive income (loss)	$	(692,239	)	$	(604,903	)	$	9,259		$	595,644		$	(692,239	)

Condensed Consolidating Balance Sheets

December 31, 2014



	Parent/Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Assets
Cash and cash equivalents	$	572,185	$	150,358	$	11,688	$	—		$	734,231
Short term investments	248,954		—		—		—			248,954
Receivables	9,656		15,933		211,043		(4,615		)	232,017
Inventories	—		190,253		—		—			190,253
Other	89,211		41,455		6,630		—			137,296
Total current assets	920,006		397,999		229,361		(4,615		)	1,542,751

Property, plant and equipment, net	10,470		6,442,623		2		363			6,453,458

Investment in subsidiaries	7,464,221		—		—		(7,464,221		)	—
Intercompany receivables	—		2,021,110		—		(2,021,110		)	—
Note receivable from Arch Western	675,000		—		—		(675,000		)	—
Other	131,884		300,058		1,572		—			433,514
Total assets	$	9,201,581	$	9,161,790	$	230,935	$	(10,164,583	)	$	8,429,723

Liabilities and Stockholders’ Equity
Accounts payable	$	23,394	$	156,664	$	55	$	—		$	180,113
Accrued expenses and other current liabilities	85,899		220,017		1,095		(4,615		)	302,396
Current maturities of debt	27,625		9,260		—		—			36,885
Total current liabilities	136,918		385,941		1,150		(4,615		)	519,394
Long-term debt	5,084,839		38,646		—		—			5,123,485
Intercompany payables	1,817,755		—		203,355		(2,021,110		)	—
Note payable to Arch Coal	—		675,000		—		(675,000		)	—
Asset retirement obligations	981		397,915		—		—			398,896
Accrued pension benefits	5,967		10,293		—		—			16,260
Accrued postretirement benefits other than pension	4,430		28,238		—		—			32,668
Accrued workers’ compensation	9,172		85,119		—		—			94,291
Deferred income taxes	422,809		—		—		—			422,809
Other noncurrent liabilities	50,919		102,461		386		—			153,766
Total liabilities	7,533,790		1,723,613		204,891		(2,700,725		)	6,761,569
Stockholders’ equity	1,667,791		7,438,177		26,044		(7,463,858		)	1,668,154
Total liabilities and stockholders’ equity	$	9,201,581	$	9,161,790	$	230,935	$	(10,164,583	)	$	8,429,723

Condensed Consolidating Balance Sheets

December 31, 2013



	Parent/Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Assets
Cash and cash equivalents	$	799,333	$	100,418		$	11,348	$	—		$	911,099
Short term investments	248,414		—			—		—			248,414
Receivables	14,177		23,018			197,015		(4,637		)	229,573
Inventories	—		264,161			—		—			264,161
Other	84,401		43,617			806		—			128,824
Total current assets	1,146,325		431,214			209,169		(4,637		)	1,782,071

Property, plant and equipment, net	24,851		6,709,398			37		—			6,734,286

Investment in subsidiaries	7,741,589		—			—		(7,741,589		)	—
Intercompany receivables			1,953,719			—		(1,953,719		)	—
Note receivable from Arch Western	675,000		—			—		(675,000		)	—
Other	162,287		311,463			86		—			473,836
Total other assets	8,578,876		2,265,182			86		(10,370,308		)	473,836
Total assets	$	9,750,052	$	9,405,794		$	209,292	$	(10,374,945	)	$	8,990,193

Liabilities and Stockholders’ Equity
Accounts payable	$	17,781	$	158,224		$	137	$	—		$	176,142
Accrued expenses and other current liabilities	53,779		228,664			781		(4,637		)	278,587
Current maturities of debt	28,882		4,611			—		—			33,493
Total current liabilities	100,442		391,499			918		(4,637		)	488,222
Long-term debt	5,099,833		18,169			—					5,118,002
Intercompany payables	1,772,624		—			181,095		(1,953,719		)	—
Note payable to Arch Coal	—		675,000			—		(675,000		)	—
Asset retirement obligations	1,095		401,618			—		—			402,713
Accrued pension benefits	7,797		(686		)	—		—			7,111
Accrued postretirement benefits other than pension	12,079		27,176			—		—			39,255
Accrued workers’ compensation	21,546		56,516			—		—			78,062
Deferred income taxes	413,546		—			—		—			413,546
Other noncurrent liabilities	67,841		121,794			398		—			190,033
Total liabilities	7,496,803		1,691,086			182,411		(2,633,356		)	6,736,944
Stockholders’ equity	2,253,249		7,714,708			26,881		(7,741,589		)	2,253,249
Total liabilities and stockholders’ equity	$	9,750,052	$	9,405,794		$	209,292	$	(10,374,945	)	$	8,990,193

Condensed Consolidating Statements of Cash Flows

Year Ended December 31, 2014



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(324,688	)	$	305,048		$	(13,942	)	$	—	$	(33,582	)
Investing Activities
Capital expenditures	(2,700		)	(144,586		)	—			—		(147,286		)
Additions to prepaid royalties	—			(7,317		)	—			—		(7,317		)
Proceeds from disposals and divestitures	57,625			4,733			—			—		62,358
Purchases of short term investments	(211,929		)	—			—			—		(211,929		)
Proceeds from sales of short term investments	205,611			—			—			—		205,611
Proceeds from sales of investments in equity securities	9,464			—			—			—		9,464
Investments in and advances to affiliates	(2,541		)	(14,116		)	—			—		(16,657		)
Cash provided by (used in) investing activities	55,530			(161,286		)	—			—		(105,756		)
Financing Activities
Payments on term loan	(19,500		)	—			—			—		(19,500		)
Net payments on other debt	(1,258		)	(4,437		)	—			—		(5,695		)
Debt financing costs	(2,219		)	—			(2,300		)	—		(4,519		)
Dividends paid	(2,123		)	—			—			—		(2,123		)
Other	(15		)	—			(5,678		)	—		(5,693		)
Transactions with affiliates, net	67,125			(89,385		)	22,260			—		—
Cash provided by (used in) financing activities	42,010			(93,822		)	14,282			—		(37,530		)
Increase (decrease) in cash and cash equivalents	(227,148		)	49,940			340			—		(176,868		)
Cash and cash equivalents, beginning of period	799,333			100,418			11,348			—		911,099
Cash and cash equivalents, end of period	$	572,185		$	150,358		$	11,688		$	—	$	734,231

Condensed Consolidating Statements of Cash Flows

Year Ended December 31, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(632,060	)	$	637,193		$	50,609		$	—		$	55,742
Investing Activities
Capital expenditures	(3,320		)	(293,664		)	—			—			(296,984		)
Additions to prepaid royalties	—			(14,947		)	—			—			(14,947		)
Proceeds from disposals and divestitures	—			433,453			—			—			433,453
Proceeds from sales-leaseback transactions	—			34,919			—			—			34,919
Purchases of short term investments	(213,726		)	—			—			—			(213,726		)
Proceeds from sales of short term investments	194,537			—			—			—			194,537
Investments in and advances to affiliates	(5,451		)	(10,321		)	—			512			(15,260		)
Change in restricted cash	3,453			—			—			—			3,453
Cash provided by (used in) investing activities	(24,507		)	149,440			—			512			125,445
Financing Activities
Contributions from parent	—			512			—			(512		)	—
Proceeds from term loan and senior notes	644,000			—			—			—			644,000
Payments to retire debt	(628,660		)	—			—			—			(628,660		)
Payments on term loan	(17,250		)	—			—			—			(17,250		)
Net payments on other debt	(6,324		)	(512		)	—			—			(6,836		)
Debt financing costs	(19,864		)	—			(625		)	—			(20,489		)
Dividends paid	(25,475		)	—			—			—			(25,475		)
Transactions with affiliates, net	838,160			(786,683		)	(51,477		)	—			—
Cash provided by (used in) financing activities	784,587			(786,683		)	(52,102		)	(512		)	(54,710		)
Increase (decrease) in cash and cash equivalents	128,020			(50		)	(1,493		)	—			126,477
Cash and cash equivalents, beginning of period	671,313			100,468			12,841			—			784,622
Cash and cash equivalents, end of period	$	799,333		$	100,418		$	11,348		$	—		$	911,099

Condensed Consolidating Statements of Cash Flows

Year Ended December 31, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(571,576	)	$	781,551		$	122,829		$	—		$	332,804
Investing Activities
Change in restricted cash	6,869			—			—			—			6,869
Capital expenditures	(4,424		)	(390,801		)	—			—			(395,225		)
Proceeds from disposals and divestitures	—			1,328			21,497			—			22,825
Investments in and advances to affiliates	(6,287		)	(13,134		)	—			1,663			(17,758		)
Purchases of short term investments	(236,862		)	—			—			—			(236,862		)
Proceeds from sales of short term investments	1,754			—			—			—			1,754
Purchase of noncontrolling interest	(17,500		)	—			—			—			(17,500		)
Additions to prepaid royalties	—			(13,269		)	—			—			(13,269		)
Cash provided by (used in) investing activities	(256,450		)	(415,876		)	21,497			1,663			(649,166		)
Financing Activities
Contributions from parent	—			1,663			—			(1,663		)	—
Proceeds from term loan and senior notes	1,993,253			—			—			—			1,993,253
Payments to retire debt	—			(452,934		)	—			—			(452,934		)
Net decrease in borrowings under lines of credit and commercial paper program	(375,000		)	—			(106,300		)	—			(481,300		)
Payments on term loan	(7,625		)	—			—			—			(7,625		)
Net payments on other debt	(682		)	—			—			—			(682		)
Debt financing costs	(50,022		)	—			(546		)	—			(50,568		)
Dividends paid	(42,440		)	—			—			—			(42,440		)
Issuance of common stock under incentive plans	5,131			—			—			—			5,131
Transactions with affiliates, net	(84,651		)	110,639			(25,988		)	—			—
Cash provided by (used in) financing activities	1,437,964			(340,632		)	(132,834		)	(1,663		)	962,835
Increase in cash and cash equivalents	609,938			25,043			11,492			—			646,473
Cash and cash equivalents, beginning of period	61,375			75,425			1,349			—			138,149
Cash and cash equivalents, end of period	$	671,313		$	100,468		$	12,841		$	—		$	784,622