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 United States):

Condensed Consolidating Statements of Operations

Three Months Ended September 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	791,269		$	—		$	—		$	791,269
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	169			688,543			—			—			688,712
Depreciation, depletion and amortization	1,549			104,765			9			—			106,323
Amortization of acquired sales contracts, net	—			(2,568		)	—			—			(2,568		)
Change in fair value of coal derivatives and coal trading activities, net	—			9,753			—			—			9,753
Asset impairment and mine closure costs	57,668			142,729			—			—			200,397
Selling, general and administrative expenses	19,104			8,214			1,482			—			28,800
Other operating income, net	2,345			(7,740		)	—			—			(5,395		)
	80,835			943,696			1,491			—			1,026,022
Loss from investment in subsidiaries	(61,537		)	—			—			61,537			—
Loss from operations	(142,372		)	(152,427		)	(1,491		)	61,537			(234,753		)
Interest expense, net
Interest expense	(114,536		)	(6,222		)	(1,070		)	26,204			(95,624		)
Interest and investment income	6,606			18,975			1,320			(26,204		)	697
	(107,930		)	12,753			250			—			(94,927		)

Loss from continuing operations before income taxes	(250,302		)	(139,674		)	(1,241		)	61,537			(329,680		)
Provision for (benefit from) income taxes	(121,939		)	—			26			—			(121,913		)
Loss from continuing operations	(128,363		)	(139,674		)	(1,267		)	61,537			(207,767		)
Income from discontinued operations, including gain on sale - net of tax	—			79,404			—			—			79,404
Net loss	$	(128,363	)	$	(60,270	)	$	(1,267	)	$	61,537		$	(128,363	)
Total comprehensive loss	$	(125,996	)	$	(59,241	)	$	(1,267	)	$	60,508		$	(125,996	)

Condensed Consolidating Statements of Operations

Nine Months Ended September 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	2,294,971		$	—		$	—		$	2,294,971
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	4,881			1,989,772			—			—			1,994,653
Depreciation, depletion and amortization	4,430			323,144			27			—			327,601
Amortization of acquired sales contracts, net	—			(7,587		)	—			—			(7,587		)
Change in fair value of coal derivatives and coal trading activities, net	—			2,053			—			—			2,053
Asset impairment and mine closure costs	78,150			142,729			—			—			220,879
Selling, general and administrative expenses	63,006			28,978			4,327			—			96,311
Other operating income, net	(4,663		)	(10,704		)	(1,109		)	—			(16,476		)
	145,804			2,468,385			3,245			—			2,617,434
Loss from investment in subsidiaries	(42,199		)	—			—			42,199			—
Loss from operations	(188,003		)	(173,414		)	(3,245		)	42,199			(322,463		)
Interest expense, net
Interest expense	(336,310		)	(18,502		)	(3,170		)	72,528			(285,454		)
Interest and investment income	22,917			49,986			4,374			(72,528		)	4,749
	(313,393		)	31,484			1,204			—			(280,705		)

Loss from continuing operations before income taxes	(501,396		)	(141,930		)	(2,041		)	42,199			(603,168		)
Provision for (benefit from) income taxes	(230,778		)	—			44			—			(230,734		)
Loss from continuing operations	(270,618		)	(141,930		)	(2,085		)	42,199			(372,434		)
Income from discontinued operations, including gain on sale - net of tax	—			101,816			—			—			101,816
Net loss	$	(270,618	)	$	(40,114	)	$	(2,085	)	$	42,199		$	(270,618	)
Total comprehensive loss	$	(262,717	)	$	(39,175	)	$	(2,085	)	$	41,260		$	(262,717	)

Condensed Consolidating Statements of Operations

Three Months Ended September 30, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	975,170		$	—		$	—		$	975,170
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	2,437			806,052			—			—			808,489
Depreciation, depletion and amortization	1,399			117,534			9			—			118,942
Amortization of acquired sales contracts, net	—			(4,093		)	—			—			(4,093		)
Change in fair value of coal derivatives and coal trading activities, net	—			5,840			—			—			5,840
Asset impairment and mine closure costs	—			(2,144		)	—			—			(2,144		)
Legal contingencies	—			(79,532		)	—			—			(79,532		)
Selling, general and administrative expenses	22,051			9,432			1,783			—			33,266
Other operating income, net	(11,052		)	(13,699		)	(89		)	—			(24,840		)
	14,835			839,390			1,703			—			855,928
Income from investment in subsidiaries	164,152			—			—			(164,152		)	—
Income (loss) from operations	149,317			135,780			(1,703		)	(164,152		)	119,242
Interest expense, net
Interest expense	(91,577		)	(6,870		)	(649		)	23,386			(75,710		)
Interest and investment income	8,329			14,570			1,946			(23,386		)	1,459
	(83,248		)	7,700			1,297			—			(74,251		)

Income (loss) from continuing operations before income taxes	66,069			143,480			(406		)	(164,152		)	44,991
Provision for income taxes	20,318			—			—			—			20,318
Income (loss) from continuing operations	45,751			143,480			(406		)	(164,152		)	24,673
Income from discontinued operations, net of tax	—			21,078			—			—			21,078
Net income (loss)	$	45,751		$	164,558		$	(406	)	$	(164,152	)	$	45,751
Total comprehensive income (loss)	$	44,299		$	163,375		$	(406	)	$	(162,969	)	$	44,299

Condensed Consolidating Statements of Operations

Nine Months Ended September 30, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	2,901,092		$	—		$	—		$	2,901,092
Costs, expenses and other													—
Cost of sales (exclusive of items shown separately below)	7,694			2,406,612			—			—			2,414,306
Depreciation, depletion and amortization	3,959			370,648			24			—			374,631
Amortization of acquired sales contracts, net	—			(22,561		)	—			—			(22,561		)
Change in fair value of coal derivatives and coal trading activities, net	—			(29,827		)	—			—			(29,827		)
Asset impairment and mine closure costs	—			523,439			—			—			523,439
Goodwill impairment	—			115,791			—			—			115,791
Legal contingencies	—			(79,532		)	—			—			(79,532		)
Selling, general and administrative expenses	62,469			30,965			5,871			—			99,305
Other operating income, net	(7,693		)	(23,811		)	(13,102		)	—			(44,606		)
	66,429			3,291,724			(7,207		)	—			3,350,946
Loss from investment in subsidiaries	(324,429		)	—			—			324,429			—
Income (loss) from operations	(390,858		)	(390,632		)	7,207			324,429			(449,854		)
Interest expense, net
Interest expense	(263,381		)	(27,285		)	(2,382		)	63,838			(229,210		)
Interest and investment income	19,087			42,508			5,811			(63,838		)	3,568
	(244,294		)	15,223			3,429			—			(225,642		)
Other non-operating expense
Net loss resulting from early retirement of ICG debt	(17,349		)	(1,693		)	—			—			(19,042		)

Income (loss) from continuing operations before income taxes	(652,501		)	(377,102		)	10,636			324,429			(694,538		)
Provision for (benefit from) income taxes	(264,237		)	—			1,581			—			(262,656		)
Income (loss) from continuing operations	(388,264		)	(377,102		)	9,055			324,429			(431,882		)
Income from discontinued operations, net of tax	—			43,618			—			—			43,618
Net Income (loss)	(388,264		)	(333,484		)	9,055			324,429			(388,264		)
Less: Net income attributable to noncontrolling interest	(268		)	—			—			—			(268		)
Net Income (loss) attributable to Arch Coal, Inc.	$	(388,532	)	$	(333,484	)	$	9,055		$	324,429		$	(388,532	)
Total comprehensive income (loss)	$	(385,523	)	$	(336,648	)	$	9,055		$	327,593		$	(385,523	)

Condensed Consolidating Balance Sheets

September 30, 2013



	Parent/Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Assets
Cash and cash equivalents	$	1,021,245	$	100,410	$	11,473	$	—		$	1,133,128
Restricted cash	—		—		—		—			—
Short term investments	248,724		—		—		—			248,724
Receivables	7,847		21,178		190,493		(4,679		)	214,839
Inventories	—		287,409		—		—			287,409
Other	96,992		48,270		277		—			145,539
Total current assets	1,374,808		457,267		202,243		(4,679		)	2,029,639

Property, plant and equipment, net	25,526		6,752,687		46		(34		)	6,778,225

Investment in subsidiaries	7,992,601		—		—		(7,992,601		)	—
Intercompany receivables	—		1,986,992		—		(1,986,992		)	—
Note receivable from Arch Western	675,000		—		—		(675,000		)	—
Other	147,950		575,551		90		—			723,591
Total other assets	8,815,551		2,562,543		90		(10,654,593		)	723,591
Total assets	$	10,215,885	$	9,772,497	$	202,379	$	(10,659,306	)	$	9,531,455

Liabilities and Stockholders’ Equity
Accounts payable	$	20,728	$	186,468	$	77	$	—		$	207,273
Accrued expenses and other current liabilities	107,756		246,063		314		(4,679		)	349,454
Current maturities of debt	19,343		3,707		—		—			23,050
Total current liabilities	147,827		436,238		391		(4,679		)	579,777
Long-term debt	5,055,021		19,363		—		—			5,074,384
Intercompany payables	1,810,718		—		176,274		(1,986,992		)	—
Note payable to Arch Coal	—		675,000		—		(675,000		)	—
Asset retirement obligations	1,150		409,971		—		—			411,121
Accrued pension benefits	36,304		32,235		—		—			68,539
Accrued postretirement benefits other than pension	14,267		30,012		—		—			44,279
Accrued workers’ compensation	25,601		56,413		—		—			82,014
Deferred income taxes	484,130		—		—		—			484,130
Other noncurrent liabilities	59,179		146,055		323		—			205,557
Total liabilities	7,634,197		1,805,287		176,988		(2,666,671		)	6,949,801
Stockholders’ equity	2,581,688		7,967,210		25,391		(7,992,635		)	2,581,654
Total liabilities and stockholders’ equity	$	10,215,885	$	9,772,497	$	202,379	$	(10,659,306	)	$	9,531,455

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	—		1,600,311		—		(1,600,311		)	—
Note receivable from Arch Western	675,000		—		—		(675,000		)	—
Other	187,171		568,314		90		—			755,575
Total other assets	9,116,679		2,168,625		90		(10,529,819		)	755,575
Total assets	$	10,209,293	$	10,071,396	$	260,731	$	(10,534,643	)	$	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
Intercompany payables	1,367,739		—		232,572		(1,600,311		)	—
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	7,354,726		1,844,360		233,259		(2,280,135		)	7,152,210
Stockholders’ equity	2,854,567		8,227,036		27,472		(8,254,508		)	2,854,567
Total liabilities and stockholders’ equity	$	10,209,293	$	10,071,396	$	260,731	$	(10,534,643	)	$	10,006,777

Condensed Consolidating Statements of Cash Flows

Nine Months Ended September 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(22,206	)	$	153,868		$	54,930		$	—		$	186,592
Investing Activities
Capital expenditures	(2,488		)	(220,680		)	—			—			(223,168		)
Minimum royalty payments	—			(10,901		)	—			—			(10,901		)
Proceeds from dispositions of property, plant and equipment	—			8,799			—			—			8,799
Proceeds from sales-leaseback transactions	—			34,919			—			—			34,919
Proceeds from sale of Canyon Fuel	—			422,663			—			—			422,663
Purchases of short term investments	(85,418		)	—			—			—			(85,418		)
Proceeds from sales of short term investments	67,255			—			—			—			67,255
Investments in and advances to affiliates	(4,016		)	(7,492		)	—			384			(11,124		)
Change in restricted cash	3,453			—			—			—			3,453
Cash provided by (used in) investing activities	(21,214		)	227,308			—			384			206,478
Financing Activities
Contributions from parent	—			384			—			(384		)	—
Payments on term loan	(12,375		)	—			—			—			(12,375		)
Payments to retire debt	—			(384		)	—			—			(384		)
Net payments on other debt	(12,700		)	—			—			—			(12,700		)
Dividends paid	(19,105		)	—			—			—			(19,105		)
Transactions with affiliates, net	437,532			(381,234		)	(56,298		)	—			—
Cash provided by (used in) financing activities	393,352			(381,234		)	(56,298		)	(384		)	(44,564		)
Increase (decrease) in cash and cash equivalents	349,932			(58		)	(1,368		)	—			348,506
Cash and cash equivalents, beginning of period	671,313			100,468			12,841			—			784,622
Cash and cash equivalents, end of period	$	1,021,245		$	100,410		$	11,473		$	—		$	1,133,128

Condensed Consolidating Statements of Cash Flows

Nine Months Ended September 30, 2012



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(610,129	)	$	874,545		$	91,979		$	—		$	356,395
Investing Activities
Capital expenditures	(4,150		)	(299,818		)	—			—			(303,968		)
Minimum royalty payments	—			(9,192		)	—			—			(9,192		)
Proceeds from dispositions of property, plant and equipment	—			1,127			21,497			—			22,624
Purchases of short term investments	(99,628		)	—			—			—			(99,628		)
Investments in and advances to affiliates	(5,138		)	(9,082		)	—			1,535			(12,685		)
Purchase of noncontrolling interest	—			(17,500		)	—			—			(17,500		)
Change in restricted cash	6,872			—			—			—			6,872
Cash provided by (used in) investing activities	(102,044		)	(334,465		)	21,497			1,535			(413,477		)
Financing Activities
Contributions from parent	—			1,535			—			(1,535		)	—
Proceeds from issuance of term loan	1,386,000			—			—			—			1,386,000
Payments on term loan	(3,500		)	—			—			—			(3,500		)
Payments to retire debt	—			(452,806		)	—			—			(452,806		)
Net decrease in borrowings under lines of credit	(375,000		)	—			(6,300		)	—			(381,300		)
Net payments from other debt	(13,078		)	—			—			—			(13,078		)
Debt financing costs	(34,640		)	—			(46		)	—			(34,686		)
Dividends paid	(36,072		)	—			—			—			(36,072		)
Proceeds from exercise of options under incentive plans	5,131			—			—			—			5,131
Transactions with affiliates, net	30,338			66,364			(96,702		)	—			—
Cash provided by (used in) financing activities	959,179			(384,907		)	(103,048		)	(1,535		)	469,689
Increase in cash and cash equivalents	247,006			155,173			10,428			—			412,607
Cash and cash equivalents, beginning of period	66,542			70,258			1,349			—			138,149
Cash and cash equivalents, end of period	$	313,548		$	225,431		$	11,777		$	—		$	550,756