Supplemental Condensed 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 condensed 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 U.S.):

Condensed Consolidating Statements of Operations

Three Months Ended March 31, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	825,502		$	—		$	—		$	825,502
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	2,883			707,690			—			—			710,573
Depreciation, depletion and amortization	1,406			117,453			9			—			118,868
Amortization of acquired sales contracts, net	—			(2,810		)	—			—			(2,810		)
Change in fair value of coal derivatives and coal trading activities, net	—			1,308			—			—			1,308
Selling, general and administrative expenses	21,698			10,035			1,476			—			33,209
Other operating income, net	(5,907		)	3,702			(1,012		)	—			(3,217		)
	20,080			837,378			473			—			857,931
Income from investment in subsidiaries	(2,871		)	—			—			2,871			—
Loss from operations	(22,951		)	(11,876		)	(473		)	2,871			(32,429		)
Interest expense, net:
Interest expense	(110,827		)	(6,455		)	(1,041		)	23,236			(95,087		)
Interest and investment income	9,098			15,443			1,531			(23,236		)	2,836
	(101,729		)	8,988			490			—			(92,251		)
Income (loss) before income taxes	(124,680		)	(2,888		)	17			2,871			(124,680		)
Benefit from income taxes	(54,631		)	—			—			—			(54,631		)
Net income (loss)	(70,049		)	(2,888		)	17			2,871			(70,049		)
Total comprehensive income (loss)	$	(68,558	)	$	(3,324	)	$	17		$	3,307		$	(68,558	)

Condensed Consolidating Statements of Operations

Three Months Ended March 31, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	1,039,651		$	—		$	—		$	1,039,651
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	2,967			847,904			—			—			850,871
Depreciation, depletion and amortization	1,216			138,744			6			—			139,966
Amortization of acquired sales contracts, net	—			(14,017		)	—			—			(14,017		)
Change in fair value of coal derivatives and coal trading activities, net	—			(3,613		)	—			—			(3,613		)
Selling, general and administrative expenses	18,644			9,637			2,580			—			30,861
Other operating income, net	(3,111		)	(3,027		)	(12,360		)	—			(18,498		)
	19,716			975,628			(9,774		)	—			985,570
Income from investment in subsidiaries	77,315			—			—			(77,315		)	—
Income from operations	57,599			64,023			9,774			(77,315		)	54,081
Interest expense, net:
Interest expense	(82,097		)	(11,484		)	(1,038		)	19,847			(74,772		)
Interest and investment income	4,828			14,128			1,912			(19,847		)	1,021
	(77,269		)	2,644			874			—			(73,751		)
Income (loss) before income taxes	(19,670		)	66,667			10,648			(77,315		)	(19,670		)
Provision for (benefit from) income taxes	(22,660		)	—			1,581			—			(21,079		)
Net income	2,990			66,667			9,067			(77,315		)	1,409
Less: Net income attributable to noncontrolling interest	(203		)	—			—			—			(203		)
Net income attributable to Arch Coal, Inc.	$	2,787		$	66,667		$	9,067		$	(77,315	)	$	1,206
Total comprehensive income	$	8,709		$	68,111		$	9,067		$	(77,178	)	$	8,709

Condensed Consolidating Balance Sheets

March 31, 2013



	Parent/Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Assets
Cash and cash equivalents	$	597,308		$	120,429	$	12,382		$	—		$	730,119
Restricted cash	2,290			—		—			—			2,290
Short term investments	248,414			—		—			—			248,414
Receivables	50,179			36,477		263,123			(4,735		)	345,044
Inventories	—			368,240		—			—			368,240
Other	101,003			88,903		369			—			190,275
Total current assets	999,194			614,049		275,874			(4,735		)	1,884,382

Property, plant and equipment, net	26,716			7,245,761		64			—			7,272,541

Investment in subsidiaries	8,259,302			—		—			(8,259,302		)	—
Intercompany receivables	(1,389,356		)	1,637,093		(247,737		)	—			—
Note receivable from Arch Western	675,000			—		—			(675,000		)	—
Other	184,571			578,560		90			—			763,221
Total other assets	7,729,517			2,215,653		(247,647		)	(8,934,302		)	763,221
Total assets	$	8,755,427		$	10,075,463	$	28,291		$	(8,939,037	)	$	9,920,144

Liabilities and Stockholders’ Equity
Accounts payable	$	27,269		$	201,925	$	75		$	—		$	229,269
Accrued expenses and other current liabilities	105,059			251,850		509			(4,735		)	352,683
Current maturities of debt	26,218			2,088		—			—			28,306
Total current liabilities	158,546			455,863		584			(4,735		)	610,258
Long-term debt	5,059,611			22,594		—			—			5,082,205
Note payable to Arch Coal	—			675,000		—			(675,000		)	—
Asset retirement obligations	1,672			409,303		—			—			410,975
Accrued pension benefits	34,595			34,747		—			—			69,342
Accrued postretirement benefits other than pension	14,486			31,927		—			—			46,413
Accrued workers’ compensation	24,032			57,007		—			—			81,039
Deferred income taxes	610,195			—		—			—			610,195
Other noncurrent liabilities	69,936			157,210		217			—			227,363
Total liabilities	5,973,073			1,843,651		801			(679,735		)	7,137,790
Stockholders’ equity	2,782,354			8,231,812		27,490			(8,259,302		)	2,782,354
Total liabilities and stockholders’ equity	$	8,755,427		$	10,075,463	$	28,291		$	(8,939,037	)	$	9,920,144

Condensed Consolidating Balance Sheets

December 31, 2012



	Parent/Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Assets
Cash and cash equivalents	$	671,313		$	100,468	$	12,841		$	—		$	784,622
Restricted cash	3,453			—		—			—			3,453
Short term investments	234,305			—		—			—			234,305
Receivables	49,281			40,452		247,171			(4,824		)	332,080
Inventories	—			365,424		—			—			365,424
Other	106,786			86,877		557			—			194,220
Total current assets	1,065,138			593,221		260,569			(4,824		)	1,914,104

Property, plant and equipment, net	27,476			7,309,550		72			—			7,337,098

Investment in subsidiaries	8,254,508			—		—			(8,254,508		)	—
Intercompany receivables	(1,367,739		)	1,600,311		(232,572		)	—			—
Note receivable from Arch Western	675,000			—		—			(675,000		)	—
Other	187,171			568,314		90			—			755,575
Total other assets	7,748,940			2,168,625		(232,482		)	(8,929,508		)	755,575
Total assets	$	8,841,554		$	10,071,396	$	28,159		$	(8,934,332	)	$	10,006,777

Liabilities and Stockholders’ Equity
Accounts payable	$	19,859		$	204,370	$	189		$	—		$	224,418
Accrued expenses and other current liabilities	65,293			259,162		124			(4,824		)	319,755
Current maturities of debt	32,054			842		—			—			32,896
Total current liabilities	117,206			464,374		313			(4,824		)	577,069
Long-term debt	5,061,925			23,954		—			—			5,085,879
Note payable to Arch Coal	—			675,000		—			(675,000		)	—
Asset retirement obligations	1,646			408,059		—			—			409,705
Accrued pension benefits	33,456			34,174		—			—			67,630
Accrued postretirement benefits other than pension	13,953			31,133		—			—			45,086
Accrued workers’ compensation	25,323			56,306		—			—			81,629
Deferred income taxes	664,182			—		—			—			664,182
Other noncurrent liabilities	69,296			151,360		374			—			221,030
Total liabilities	5,986,987			1,844,360		687			(679,824		)	7,152,210
Stockholders’ equity	2,854,567			8,227,036		27,472			(8,254,508		)	2,854,567
Total liabilities and stockholders’ equity	$	8,841,554		$	10,071,396	$	28,159		$	(8,934,332	)	$	10,006,777

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(61,840	)	$	120,755		$	(15,624	)	$	—		$	43,291
Investing Activities
Change in restricted cash	1,163			—			—			—			1,163
Capital expenditures	(615		)	(53,907		)	—			—			(54,522		)
Proceeds from dispositions of property, plant and equipment	—			714			—			—			714
Investments in and advances to affiliates	(2,043		)	(2,383		)	—			128			(4,298		)
Purchases of short term investments	(26,787		)	—			—			—			(26,787		)
Proceeds from sales of short term investments	11,534			—			—			—			11,534
Minimum royalty payments	—			(9,142		)	—			—			(9,142		)
Cash provided by (used in) investing activities	(16,748		)	(64,718		)	—			128			(81,338		)
Financing Activities
Contributions from parent	—			128			—			(128		)	—
Payments on term note	(4,125		)	—			—			—			(4,125		)
Net payments on other debt	(5,836		)	(128		)	—			—			(5,964		)
Dividends paid	(6,367		)	—			—			—			(6,367		)
Transactions with affiliates, net	20,911			(36,076		)	15,165			—			—
Cash provided by (used in) financing activities	4,583			(36,076		)	15,165			(128		)	(16,456		)
Increase (decrease) in cash and cash equivalents	(74,005		)	19,961			(459		)	—			(54,503		)
Cash and cash equivalents, beginning of period	671,313			100,468			12,841			—			784,622
Cash and cash equivalents, end of period	$	597,308		$	120,429		$	12,382		$	—		$	730,119

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(39,702	)	$	19,456		$	75,236		$	—		$	54,990
Investing Activities
Change in restricted cash	1,455			—			—			—			1,455
Capital expenditures	(1,177		)	(92,094		)	—			—			(93,271		)
Proceeds from dispositions of property, plant and equipment	—			608			21,497			—			22,105
Investments in and advances to affiliates	(3,619		)	(3,488		)	—			1,330			(5,777		)
Minimum royalty payments	—			(8,262		)	—			—			(8,262		)
Cash provided by (used in) investing activities	(3,341		)	(103,236		)	21,497			1,330			(83,750		)
Financing Activities
Contributions from parent	—			1,330			—			(1,330		)	—
Net increase (decrease) in borrowings under lines of credit	50,000			—			(16,000		)	—			34,000
Net payments from other debt	(5,993		)	(1,330		)	—			—			(7,323		)
Debt financing costs	(54		)	—			(46		)	—			(100		)
Dividends paid	(23,327		)	—			—			—			(23,327		)
Issuance of common stock under incentive plans	5,131			—			—			—			5,131
Transactions with affiliates, net	(14,060		)	84,037			(69,977		)	—			—
Cash provided by (used in) financing activities	11,697			84,037			(86,023		)	(1,330		)	8,381
Increase (decrease) in cash and cash equivalents	(31,346		)	257			10,710			—			(20,379		)
Cash and cash equivalents, beginning of period	66,542			70,258			1,349			—			138,149
Cash and cash equivalents, end of period	$	35,196		$	70,515		$	12,059		$	—		$	117,770