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 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 June 30, 2014



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	713,776		$	—		$	—		$	713,776
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	3,547			619,470			—			(880		)	622,137
Depreciation, depletion and amortization	1,346			101,109			9			—			102,464
Amortization of acquired sales contracts, net	—			(3,239		)	—			—			(3,239		)
Change in fair value of coal derivatives and coal trading activities, net	—			(2,992		)	—			—			(2,992		)
Asset impairment costs	1,512			—			—			—			1,512
Selling, general and administrative expenses	21,729			7,250			1,489			(537		)	29,931
Other operating income, net	(1,883		)	1,554			(1,320		)	1,417			(232		)
	26,251			723,152			178			—			749,581
Loss from investment in subsidiaries	2,502			—			—			(2,502		)	—
Loss from operations	(23,749		)	(9,376		)	(178		)	(2,502		)	(35,805		)
Interest expense, net
Interest expense	(116,084		)	(6,565		)	(1,092		)	25,781			(97,960		)
Interest and investment income	8,125			18,341			1,351			(25,781		)	2,036
	(107,959		)	11,776			259			—			(95,924		)

Income (loss) from continuing operations before income taxes	(131,708		)	2,400			81			(2,502		)	(131,729		)
Benefit from income taxes	(34,848		)	—			(21		)	—			(34,869		)
Net loss	$	(96,860	)	$	2,400		$	102		$	(2,502	)	$	(96,860	)
Total comprehensive income (loss)	$	(98,437	)	$	1,647		$	102		$	(1,749	)	$	(98,437	)

Condensed Consolidating Statements of Operations

Three Months Ended June 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	766,332		$	—		$	—		$	766,332
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	1,829			654,369			—			—			656,198
Depreciation, depletion and amortization	1,475			109,601			9			—			111,085
Amortization of acquired sales contracts, net	—			(2,209		)	—			—			(2,209		)
Change in fair value of coal derivatives and coal trading activities, net	—			(9,008		)	—			—			(9,008		)
Asset impairment costs	20,482			—			—			—			20,482
Selling, general and administrative expenses	22,205			10,729			1,368			—			34,302
Other operating income, net	(1,101		)	(7,041		)	(97		)	—			(8,239		)
	44,890			756,441			1,280			—			802,611
Income from investment in subsidiaries	26,961			—			—			(26,961		)	—
Income (loss) from operations	(17,929		)	9,891			(1,280		)	(26,961		)	(36,279		)
Interest expense, net
Interest expense	(110,946		)	(5,825		)	(1,059		)	23,074			(94,756		)
Interest and investment income	7,201			15,566			1,523			(23,074		)	1,216
	(103,745		)	9,741			464			—			(93,540		)

Income (loss) from continuing operations before income taxes	(121,674		)	19,632			(816		)	(26,961		)	(129,819		)
Benefit from income taxes	(49,468		)	—			—			—			(49,468		)
Income (loss) from continuing operations	(72,206		)	19,632			(816		)	(26,961		)	(80,351		)
Income from discontinued operations, net of tax	—			8,145			—			—			8,145
Net income (loss)	$	(72,206	)	$	27,777		$	(816	)	$	(26,961	)	$	(72,206	)
Total comprehensive income (loss)	$	(68,163	)	$	28,123		$	(816	)	$	(27,307	)	$	(68,163	)

Condensed Consolidating Statements of Operations

Six Months Ended June 30, 2014



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	1,449,747		$	—		$	—		$	1,449,747
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	6,937			1,303,246			—			(1,732		)	1,308,451
Depreciation, depletion and amortization	2,818			204,051			18			—			206,887
Amortization of acquired sales contracts, net	—			(6,935		)	—			—			(6,935		)
Change in fair value of coal derivatives and coal trading activities, net	—			(2,078		)	—			—			(2,078		)
Asset impairment costs	1,512			—			—			—			1,512
Selling, general and administrative expenses	41,673			15,115			3,292			(1,013		)	59,067
Other operating income, net	(290		)	(7,929		)	(2,756		)	2,745			(8,230		)
	52,650			1,505,470			554			—			1,558,674
Loss from investment in subsidiaries	(32,844		)	—			—			32,844			—
Loss from operations	(85,494		)	(55,723		)	(554		)	32,844			(108,927		)
Interest expense, net
Interest expense	(229,739		)	(12,890		)	(2,142		)	50,340			(194,431		)
Interest and investment income	15,726			35,993			2,500			(50,340		)	3,879
	(214,013		)	23,103			358			—			(190,552		)

Loss from continuing operations before income taxes	(299,507		)	(32,620		)	(196		)	32,844			(299,479		)
Provision for (benefit from) income taxes	(78,508		)	—			28			—			(78,480		)
Net loss	$	(220,999	)	$	(32,620	)	$	(224	)	$	32,844		$	(220,999	)
Total comprehensive loss	$	(225,206	)	$	(34,779	)	$	(224	)	$	35,003		$	(225,206	)

Condensed Consolidating Statements of Operations

Six Months Ended June 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues	$	—		$	1,503,702		$	—		$	—		$	1,503,702
Costs, expenses and other
Cost of sales (exclusive of items shown separately below)	4,712			1,301,229			—			—			1,305,941
Depreciation, depletion and amortization	2,880			218,380			18			—			221,278
Amortization of acquired sales contracts, net	—			(5,019		)	—			—			(5,019		)
Change in fair value of coal derivatives and coal trading activities, net	—			(7,700		)	—			—			(7,700		)
Asset impairment costs	20,482			—			—			—			20,482
Selling, general and administrative expenses	43,903			20,763			2,845			—			67,511
Other operating income, net	(7,009		)	(2,963		)	(1,109		)	—			(11,081		)
	64,968			1,524,690			1,754			—			1,591,412
Income from investment in subsidiaries	19,492			—			—			(19,492		)	—
Income (loss) from operations	(45,476		)	(20,988		)	(1,754		)	(19,492		)	(87,710		)
Interest expense, net
Interest expense	(221,761		)	(12,130		)	(2,100		)	46,161			(189,830		)
Interest and investment income	16,161			30,998			3,054			(46,161		)	4,052
	(205,600		)	18,868			954			—			(185,778		)

Loss from continuing operations before income taxes	(251,076		)	(2,120		)	(800		)	(19,492		)	(273,488		)
Benefit from income taxes	(108,821		)	—			—			—			(108,821		)
Loss from continuing operations	(142,255		)	(2,120		)	(800		)	(19,492		)	(164,667		)
Income from discontinued operations, net of tax	—			22,412			—			—			22,412
Net income (loss)	$	(142,255	)	$	20,292		$	(800	)	$	(19,492	)	$	(142,255	)
Total comprehensive income (loss)	$	(136,721	)	$	20,202		$	(800	)	$	(19,402	)	$	(136,721	)

Condensed Consolidating Balance Sheets

June 30, 2014



	Parent/Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Assets	$ 628,251
Cash and cash equivalents	$	628,251	$	100,360	$	11,543	$	—		$	740,154
Short term investments	248,647		—		—		—			248,647
Receivables	26,284		14,060		203,416		(4,609		)	239,151
Inventories	—		228,726		—		—			228,726
Other	85,461		38,039		1,610		—			125,110
Total current assets	988,643		381,185		216,569		(4,609		)	1,581,788

Property, plant and equipment, net	16,663		6,586,776		19		—			6,603,458

Investment in subsidiaries	7,643,340		—		—		(7,643,340		)	—
Intercompany receivables	—		2,009,804		—		(2,009,804		)	—
Note receivable from Arch Western	675,000		—		—		(675,000		)	—
Other	152,974		317,772		116		—			470,862
Total other assets	8,471,314		2,327,576		116		(10,328,144		)	470,862
Total assets	$	9,476,620	$	9,295,537	$	216,704	$	(10,332,753	)	$	8,656,108

Liabilities and Stockholders’ Equity
Accounts payable	$	13,286	$	146,871	$	52	$	—		$	160,209
Accrued expenses and other current liabilities	70,523		227,552		851		(4,609		)	294,317
Current maturities of debt	22,011		5,255		—		—			27,266
Total current liabilities	105,820		379,678		903		(4,609		)	481,792
Long-term debt	5,092,064		24,289		—		—			5,116,353
Intercompany payables	1,820,942		—		188,862		(2,009,804		)	—
Note payable to Arch Coal	—		675,000		—		(675,000		)	—
Asset retirement obligations	1,037		394,776		—		—			395,813
Accrued pension benefits	2,869		11,056		—		—			13,925
Accrued postretirement benefits other than pension	4,374		33,660		—		—			38,034
Accrued workers’ compensation	27,214		46,869		—		—			74,083
Deferred income taxes	332,207		—		—		—			332,207
Other noncurrent liabilities	58,704		113,525		283		—			172,512
Total liabilities	7,445,231		1,678,853		190,048		(2,689,413		)	6,624,719
Stockholders’ equity	2,031,389		7,616,684		26,656		(7,643,340		)	2,031,389
Total liabilities and stockholders’ equity	$	9,476,620	$	9,295,537	$	216,704	$	(10,332,753	)	$	8,656,108

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	7,709,201		—			—		(7,709,201		)	—
Intercompany receivables	—		1,921,331			—		(1,921,331		)	—
Note receivable from Arch Western	675,000		—			—		(675,000		)	—
Other	162,287		311,463			86		—			473,836
Total other assets	8,546,488		2,232,794			86		(10,305,532		)	473,836
Total assets	$	9,717,664	$	9,373,406		$	209,292	$	(10,310,169	)	$	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	1,740,236		—			181,095		(1,921,331		)	—
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	7,464,415		1,691,086			182,411		(2,600,968		)	6,736,944
Stockholders’ equity	2,253,249		7,682,320			26,881		(7,709,201		)	2,253,249
Total liabilities and stockholders’ equity	$	9,717,664	$	9,373,406		$	209,292	$	(10,310,169	)	$	8,990,193

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 2014



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(268,382	)	$	196,505		$	(6,469	)	$	—	$	(78,346	)
Investing Activities
Capital expenditures	(660		)	(95,086		)	—			—		(95,746		)
Payments of minimum royalties	—			(3,341		)	—			—		(3,341		)
Proceeds from disposals and divestitures	39,132			4,113			—			—		43,245
Purchases of short term investments	(168,951		)	—			—			—		(168,951		)
Proceeds from sales of short term investments	166,018						—			—		166,018
Investments in and advances to affiliates	(1,581		)	(7,920		)	—			—		(9,501		)
Cash provided by (used in) investing activities	33,958			(102,234		)	—			—		(68,276		)
Financing Activities
Payments on term loan	(9,750		)	—			—			—		(9,750		)
Net payments on other debt	(7,547		)	(1,843		)	—			—		(9,390		)
Debt financing costs	(1,957		)	—			—			—		(1,957		)
Dividends paid	(2,123		)	—			—			—		(2,123		)
Change in restricted cash	—			—			(1,103		)	—		(1,103		)
Transactions with affiliates, net	84,719			(92,486		)	7,767			—		—
Cash provided by (used in) financing activities	63,342			(94,329		)	6,664			—		(24,323		)
Increase (decrease) in cash and cash equivalents	(171,082		)	(58		)	195			—		(170,945		)
Cash and cash equivalents, beginning of period	799,333			100,418			11,348			—		911,099
Cash and cash equivalents, end of period	$	628,251		$	100,360		$	11,543		$	—	$	740,154

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 2013



	Parent/Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Cash provided by (used in) operating activities	$	(217,517	)	$	287,055		$	(17,493	)	$	—		$	52,045
Investing Activities
Capital expenditures	(1,511		)	(167,553		)	—			—			(169,064		)
Payments of minimum royalties	—			(10,162		)	—			—			(10,162		)
Proceeds from sale-leaseback transactions	—			5,080			—			—			5,080
Proceeds from disposals and divestitures	—			34,919			—			—			34,919
Purchases of short term investments	(61,870		)				—			—			(61,870		)
Proceeds from sales of short term investments	47,097			—			—			—			47,097
Investments in and advances to affiliates	(3,012		)	(5,385		)	—			255			(8,142		)
Change in restricted cash	2,368			—			—			—			2,368
Cash provided by (used in) investing activities	(16,928		)	(143,101		)	—			255			(159,774		)
Financing Activities
Contributions from parent	—			255			—			(255		)	—
Payments on term loan	(8,250		)	—			—			—			(8,250		)
Net payments on other debt	(11,448		)	(255		)	—			—			(11,703		)
Dividends paid	(12,735		)	—			—			—			(12,735		)
Transactions with affiliates, net	127,370			(143,975		)	16,605			—			—
Cash provided by (used in) financing activities	94,937			(143,975		)	16,605			(255		)	(32,688		)
Decrease in cash and cash equivalents	(139,508		)	(21		)	(888		)	—			(140,417		)
Cash and cash equivalents, beginning of period	671,313			100,468			12,841			—			784,622
Cash and cash equivalents, end of period	$	531,805		$	100,447		$	11,953		$	—		$	644,205