Arch Resources (ARCH) 10-Q 9 Nov 09 2009 Q3 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
REVENUES
Coal sales	$614,957	$769,458	$1,850,609	$2,253,925
COSTS, EXPENSES AND OTHER
Cost of coal sales	489,290	567,372	1,503,937	1,650,259
Depreciation, depletion and amortization	71,468	72,185	212,986	217,180
Selling, general and administrative expenses	24,029	22,235	70,770	80,937
Change in fair value of coal derivatives and coal trading activities, net	(3,342)	18,382	(10,328)	(65,336)
Costs related to acquisition of Jacobs Ranch	791	0	7,166	0
Other operating expense (income), net	(15,617)	1,354	(28,141)	(2,993)
Total operating expenses	566,619	681,528	1,756,390	1,880,047
Income from operations	48,338	87,930	94,219	373,878
Interest expense, net:
Interest expense	(29,791)	(17,019)	(70,466)	(56,228)
Interest income	399	235	7,284	1,128
Interest expense, net	(29,392)	(16,784)	(63,182)	(55,100)
Income before income taxes	18,946	71,146	31,037	318,778
Provision for (benefit from) income taxes	(6,270)	(26,881)	(9,590)	26,059
Net income	25,216	98,027	40,627	292,719
Less: Net (income) loss attributable to noncontrolling interest	(31)	(179)	11	(727)
Net income attributable to Arch Coal, Inc.	$25,185	$97,848	$40,638	$291,992
EARNINGS PER COMMON SHARE
Basic earnings per common share	0.16	0.68	0.28	2.03
Diluted earnings per common share	0.16	0.68	0.28	2.02
Basic weighted average shares outstanding	155,622	144,035	147,122	143,885
Diluted weighted average shares outstanding	156,005	144,898	147,332	144,848
Dividends declared per common share	0.09	0.09	0.27	0.25

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$840,293	$70,649
Trade accounts receivable	173,994	215,053
Other receivables	20,662	43,419
Inventories	237,293	191,568
Prepaid royalties	25,711	43,780
Deferred income taxes	33,830	52,918
Coal derivative asset	23,721	43,173
Other	45,539	45,818
Total current assets	1,401,043	706,378
Property, plant and equipment, net	2,745,469	2,703,083
Other assets:
Prepaid royalties	83,722	66,918
Goodwill	46,832	46,832
Deferred income taxes	302,377	294,682
Equity investments	90,306	87,761
Other	124,189	73,310
Total other assets	647,426	569,503
Total assets	4,793,938	3,978,964
Current liabilities:
Accounts payable	129,048	186,322
Coal derivative liabilities	5,640	10,757
Accrued liabilities and other current liabilities	166,448	249,203
Current maturities of debt and short-term borrowings	195,333	213,465
Total current liabilities	496,469	659,747
Long-term debt	1,692,167	1,098,948
Asset retirement obligations	270,642	255,369
Accrued pension benefits	63,904	73,486
Accrued postretirement benefits other than pension	40,566	58,163
Accrued workers' compensation	27,706	30,107
Other noncurrent liabilities	80,473	65,526
Total liabilities	2,671,927	2,241,346
Redeemable noncontrolling interest	8,940	8,885
Stockholders' equity:
Common stock, $0.01 par value, authorized 260,000 shares, issued 163,953 and 144,345 shares, respectively	1,643	1,447
Paid-in capital	1,718,088	1,381,496
Treasury stock, 1,512 shares at September 30, 2009 and December 31, 2008, at cost	(53,848)	(53,848)
Retained earnings	479,025	478,734
Accumulated other comprehensive loss	(31,837)	(79,096)
Total stockholders' equity	2,113,071	1,728,733
Total liabilities and stockholders' equity	$4,793,938	$3,978,964

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets [Parenthetical] (USD $)
Share data in Thousands, except Per Share data	Sep. 30, 2009	Dec. 31, 2008
Condensed Consolidated Statement of Balance Sheet [Parenthetical]
Common Stock Par or Stated Value Per Share	0.01	0.01
Common Stock, Shares Authorized	260,000	260,000
Common Stock, Shares, Issued	163,953	144,345
Treasury Stock, Shares	1,512	1,512

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
OPERATING ACTIVITIES
Net income	$40,627	$292,719
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	212,986	217,180
Prepaid royalties expensed	24,140	27,161
Gain on dispositions of property, plant and equipment	(81)	(178)
Employee stock-based compensation	10,253	9,768
Changes in:
Receivables	63,785	(29,646)
Inventories	(45,725)	3,923
Coal derivative asset and liabilities	21,911	(57,929)
Accounts payable, accrued expenses and other current liabilities	(74,607)	28,821
Deferred income taxes	(15,165)	8,067
Other	8,319	8,208
Cash provided by operating activities	246,443	508,094
INVESTING ACTIVITIES
Capital expenditures	(280,033)	(414,125)
Proceeds from dispositions of property, plant and equipment	806	1,069
Purchases of investments and advances to affilates	(10,353)	(4,359)
Additions to prepaid royalties	(22,874)	(19,429)
Reimbursement of deposits on equipment	3,209	2,697
Cash used in investing activities	(309,245)	(434,147)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	584,784	0
Proceeds from the sale of common stock	326,452	0
Purchases of treasury stock	0	(47,932)
Net increase in borrowings under lines of credit and commercial paper program	4,345	50,882
Net payments on other debt	(13,276)	(10,995)
Debt financing costs	(29,596)	(233)
Dividends paid	(40,347)	(35,989)
Issuance of common stock under incentive plans	84	6,306
Cash provided by (used in) financing activities	832,446	(37,961)
Increase in cash and cash equivalents	769,644	35,986
Cash and cash equivalents, beginning of period	70,649	5,080
Cash and cash equivalents, end of period	$840,293	$41,066

Basis of Presentation

Basis of Presentation
	9 Months Ended Sep. 30, 2009 USD / shares
Basis of Presentation
Organization, Consolidation and Presentation of Financial Statements [Text Block]	1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Arch Coal, Inc. and its subsidiaries and controlled entities (the Company). The Companys primary business is the production of steam and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and export markets. The Companys mines are located in southern West Virginia, eastern Kentucky, Virginia, Wyoming, Colorado and Utah. All subsidiaries (except as noted below) are wholly-owned. Intercompany transactions and accounts have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and U.S. Securities and Exchange Commission regulations. In the opinion of management, all adjustments, consisting of normal, recurring accruals considered necessary for a fair presentation, have been included. The Companys management evaluated the period from October 1, 2009 to November 9, 2009 for items requiring recognition or disclosure in the financial statements. These notes include disclosures of subsequent events to the extent necessary to keep the accompanying condensed consolidated financial statements from being misleading. Results of operations for the three and nine month periods ended September 30, 2009 are not necessarily indicative of results to be expected for the year ending December 31, 2009. These financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2008 included in the Companys Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. The Company owns a 99% membership interest in a joint venture named Arch Western Resources, LLC (Arch Western) which operates coal mines in Wyoming, Colorado and Utah. The Company also acts as the managing member of Arch Western.

Accounting Policies

Accounting Policies
	9 Months Ended Sep. 30, 2009 USD / shares
Accounting Policies
Significant Accounting Policies [Text Block]	2. Accounting Policies New Accounting Pronouncements The Financial Accounting Standards Board (FASB) has established the FASB Accounting Standards Codification (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the United States for financial statements of interim and annual periods ending after September 15, 2009. References to authoritative accounting principles after the effective date will reference the Codification and not the previous accounting guidance. On January 1, 2009, the Company changed its presentation of noncontrolling interests in subsidiaries, pursuant to new guidance in the Consolidation topic of the Codification, which requires that a noncontrolling interest (previously referred to as minority interest) in a consolidated subsidiary be displayed in the consolidated balance sheet as a separate component of equity and the amount of net income attributable to the noncontrolling interest be included in consolidated net income on the face of the consolidated statement of income. Because the noncontrolling interest in Arch Western is redeemable, it is presented in the mezzanine between liabilities and equity. This change resulted in a decrease in other liabilities of $8.9 million as of December 31, 2008 from what was previously reported for the reclassification of the noncontrolling interest in Arch Western. This change also resulted in an increase in other operating income, net and net income of $0.2 million for the three months ended September 30, 2008 from what was previously reported for the amount of income attributable to the noncontrolling interest in Arch Western. For the nine months ended September 30, 2008 this change resulted in an increase in other operating income, net and in net income of $0.7 million from what was previously reported for the amount of income attributable to the noncontrolling interest in Arch Western. On January 1, 2009, the Company adopted the new disclosure requirements of the Derivatives and Hedging topic of the Codification. The new disclosures include qualitative disclosures about objectives for using derivatives, tabular disclosures about the gross fair value of derivative instruments, gains and losses from derivative instruments by type of contract, and the locations of these amounts in the interim and annual financial statements. See Note 7, Derivatives for the disclosures required. New authoritative guidance related to the accounting for assets acquired and liabilities assumed in business combinations was effective on January 1, 2009 for business combinations occurring after that date. The new provisions of the Business Combinations topic of the Codification clarify and amend the accounting guidance for the acquirers recognition and measurement of the assets acquired, liabilities assumed and any noncontrolling interest in the acquiree in a business combination. Also, assets acquired and liabilities assumed in a business combination that arise from pre-acquisition contingencies are to be recognized at fair value and new disclosures are required to include changes in the range of possible outcom

Business Combinations

Business Combinations
	9 Months Ended Sep. 30, 2009 USD / shares
Business Combinations
Business Combination Disclosure [Text Block]	3. Business Combinations On October1, 2009, the Company consummated its previously announced purchase of all of the issued and outstanding membership interests of Jacobs Ranch Holdings I LLC, the parent of the Jacobs Ranch mining operations, for a purchase price of $764.0 million, including approximately 352 million tons of coal reserves adjacent to the Companys Black Thunder mining complex. Disclosures with respect to the acquisition are not included in these notes to the condensed consolidated financial statements due to ongoing valuation and purchase price allocation efforts. The Company recognized costs of $0.8 million and $7.2 million related to the acquisition in the accompanying condensed consolidated statement of income for the three and nine months ended September 30, 2009, respectively.

Equity and Debt Offerings

Equity and Debt Offerings
	9 Months Ended Sep. 30, 2009 USD / shares
Equity and Debt Offerings
Equity and Debt Offerings [Text Block]	4. Equity and Debt Offerings On July 31, 2009, the Company sold 17 million shares of its common stock at a public offering price of $17.50 per share and issued $600.0 million in aggregate principal amount of 8.75% senior unsecured notes due 2016 at an initial issue price of 97.464% of the face amount. On August 6, 2009, the Company issued an additional 2.55 million shares of its common stock under the same terms and conditions to cover underwriters over-allotments. The net proceeds received from the issuance of common stock were $326.5 million and the net proceeds received from the issuance of the 8.75% senior unsecured notes were $570.3 million. The proceeds from these transactions were used primarily to finance the purchase of the Jacobs Ranch mining complex discussed in Note 3, Business Combinations.

Commercial Transactions

Commercial Transactions
	9 Months Ended Sep. 30, 2009 USD / shares
Commercial Transactions
Other Income and Other Expense Disclosure [Text Block]	5. Commercial Transactions During the three months ended September 30, 2009, approximately half of our other operating income was generated by financial settlements of physical forward contracts.

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Sep. 30, 2009 USD / shares
Fair Value Measurements
Fair Value Disclosures [Text Block]	6. Fair Value Measurements The hierarchy of fair value measurements prioritizes the inputs to valuation techniques used to measure fair value. The levels of the hierarchy, as defined below, give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets. Level 1 assets include available-for-sale equity securities and coal futures that are submitted for clearing on the New York Mercantile Exchange. Level 2 is defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Companys level 2 assets and liabilities include commodity contracts (coal and heating oil) with fair values derived from quoted prices in over-the-counter markets or from prices received from direct broker quotes. Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. These include the Companys commodity option contracts (primarily coal and heating oil) valued using modeling techniques, such as Black-Scholes, that require the use of inputs, particularly volatility, that are not observable. The table below sets forth, by level, the Companys financial assets and liabilities that are accounted for at fair value: Fair Value at September 30, 2009 Total Level 1 Level 2 Level 3 (In thousands) Assets: Investments in equity securities.......................... $ 2,636 $ 2,269 $ $ 367 Derivatives.............................................................. 25,283 22,368 2,915 Total assets....................................................... $ 27,919 $ 2,269 $ 22,368 $ 3,282 Liabilities: Derivatives.............................................................. $ 11,846 $ 1,869 $ 11,877 $ (1,900) The Companys contracts with certain of its counterparties allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. For classification purposes, the Company records the net fair value of all the positions with these counterparties as a net asset or liability. Each level in the table above displays the underlying contracts according to their classification in the accompanying condensed consolidated balance sheet, based on this counterparty netting. The following table summarizes the change in the fair values of financial instruments categorized as level 3. Three Months Ended September 30, 2009 Nine Months Ended September 30, 2009 (In thousands) Beginning balance..................................................................................................

Derivatives

Derivatives
	9 Months Ended Sep. 30, 2009 USD / shares
Derivatives
Derivative Instruments and Hedging Activities Disclosure [Text Block]	7. Derivatives The Company generally utilizes derivative financial instruments to manage exposures to commodity prices. Additionally, the Company may hold certain coal derivative financial instruments for trading purposes. All derivative financial instruments are recognized in the balance sheet at fair value. In a fair value hedge, the Company hedges the risk of changes in the fair value of a firm commitment, typically a fixed-price coal sales contract. Changes in both the hedged firm commitment and the fair value of a derivative used as a hedge instrument in a fair value hedge are recorded in earnings. In a cash flow hedge, the Company hedges the risk of changes in future cash flows related to a forecasted purchase or sale. Changes in the fair value of the derivative instrument used as a hedge instrument in a cash flow hedge are recorded in other comprehensive income. Amounts in other comprehensive income are reclassified to earnings when the hedged transaction affects earnings and are classified in a manner consistent with the transaction being hedged. The Company formally documents the relationships between hedging instruments and the respective hedged items, as well as its risk management objectives for hedge transactions. The Company evaluates the effectiveness of its hedging relationships both at the hedges inception and on an ongoing basis. Any ineffective portion of the change in fair value of a derivative instrument used as a hedge instrument in a fair value or cash flow hedge is recognized immediately in earnings. The ineffective portion is based on the extent to which exact offset is not achieved between the change in fair value of the hedge instrument and the cumulative change in expected future cash flows on the hedged transaction from inception of the hedge in a cash flow hedge or the change in the fair value of the firm commitment in a fair value hedge. Diesel fuel price risk management The Company is exposed to price risk with respect to diesel fuel purchased for use in its operations. The Company purchases approximately 50-60 million gallons of diesel fuel annually in its operations, including the effect of the acquisition of the Jacobs Ranch operations. To reduce the volatility in the price of diesel fuel for its operations, the Company uses forward physical diesel purchase contracts, as well as heating oil swaps and purchased call options. At September 30, 2009, the Company had protected the price of approximately 50% of its expected purchases for fiscal year 2009 and for fiscal year 2010. Since the changes in the price of heating oil highly correlate to changes in the price of the hedged diesel fuel purchases, the heating oil swaps and purchased call options qualify for cash flow hedge accounting. The Company held heating oil swaps and purchased call options for approximately 33.0 million gallons as of September 30, 2009. Coal risk management positions The Company may sell or purchase forward contracts and options in the over-the-counter coal market in order to manage its exposure to coal prices. The Company has exposure to the risk of fluctuating coal prices related to forecasted sales or purchases of coa

Inventories

Inventories
	9 Months Ended Sep. 30, 2009 USD / shares
Inventories
Inventory Disclosure [Text Block]	8. Inventories Inventories consist of the following: September 30, December 31, 2009 2008 (In thousands) Coal............................................................................................................................................ $ 108,370 $ 64,683 Repair parts and supplies, net of allowance........................................................................ 128,923 126,885 $ 237,293 $ 191,568 The repair parts and supplies are stated net of an allowance for slow-moving and obsolete inventories of $13.0 million at September 30, 2009, and $12.7 million at December 31, 2008.

Debt

Debt
	9 Months Ended Sep. 30, 2009 USD / shares
Debt
Debt Disclosure [Text Block]	9. Debt September 30, December 31, 2009 2008 (In thousands) Commercial paper................................................................................................................... $ 43,612 $ 65,671 Indebtedness to banks under credit facilities................................................................... 300,000 273,597 6.75% senior notes ($950.0 million face value) due July 1, 2013..................................... 955,123 956,148 8.75% senior notes ($600.0 million face value) due August 1, 2016 585,044 Other........................................................................................................................................ 3,721 16,997 1,887,500 1,312,413 Less current maturities of debt and short-term borrowings............................................ 195,333 213,465 Long-term debt....................................................................................................................... $ 1,692,167 $ 1,098,948 The current maturities of debt include amounts borrowed that are supported by credit facilities that have a term of less than one year and amounts borrowed under credit facilities with terms longer than one year that the Company does not intend to refinance on a long-term basis, based on cash projections and managements plans. 8.75% senior notes On July31, 2009, the Company entered into an indenture in connection with the issuance of the 8.75% senior notes as discussed in Note 4, Equity and Debt Offerings. Interest is payable on the notes on February 1 and August 1 of each year, commencing February1, 2010. At any time on or after August1, 2013, the Company may redeem some or all of the notes. The redemption price, reflected as a percentage of the principal amount, is: 104.375% for notes redeemed between August1, 2013 and July31, 2014; 102.188% for notes redeemed between August1, 2014 and July31, 2015; and 100% for notes redeemed on or after August1, 2015. The notes are guaranteed by most of the Companys subsidiaries, except for Arch Western and its subsidiaries and Arch Receivable Company, LLC. If the Company fails to meet a coverage ratio test as defined in the indenture, the ability of the Company and its subsidiaries to incur additional debt; pay dividends and make distributions or repurchase stock; make investments; create liens; issue and sell capital stock of subsidiaries; sell assets; enter into restrictions affecting the ability of restricted subsidiaries to make distributions, loans or advances to the Company; engage in transactions with affiliates; enter into sale and leasebacks; and merge or consolidate or transfer and sell assets would be limited. The Company and the guarantor subsidiaries entered into a registration rights agreement (the Registration Rights Agreement) in connection with the senior notes. Pursuant to the Registration Rights Agreement, the Company and the guarantor subsidiaries agreed to file a registration statement with the Securities and Exchange Commission to exchange a like aggregate principal amount of senio

Taxes

Taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Taxes
Taxes [Text Block]	10. Taxes As part of the Emergency Economic Stabilization Act enacted on October 3, 2008, the Company filed for black lung excise tax refunds on taxes paid on export sales subsequent to October 1, 1990, along with interest computed at statutory rates. The Company recognized refunds of $11.0 million, plus interest of $10.3 million, in the fourth quarter of 2008. The Internal Revenue Service has approved the Companys claim for refund and the Company recorded additional income of $6.8 million during the nine months ended September 30, 2009, to adjust the estimated amount to be received, of which $6.1 million is reflected in the caption interest income in the accompanying condensed consolidated income statement, with the remainder in cost of coal sales. As of September 30, 2009, the Company had received all of the refunds recognized. During the third quarter of 2008, the Company reached a settlement with the IRS regarding the Companys treatment of the acquisition of the coal operations of Atlantic Richfield Company (ARCO) and the simultaneous combination of the acquired ARCO operations and the Companys Wyoming operations into the Arch Western joint venture. The settlement did not result in a net change in deferred tax assets, but involved a re-characterization of deferred tax assets, including an increase in net operating loss carryforwards of $145.1million and other amortizable assets which will provide additional tax deductions through 2013. A portion of these future cash tax benefits accrue to ARCO pursuant to the original purchase agreement, including $6.8million that was recorded as goodwill during the third quarter of 2008. This settlement and the related increase in net operating loss carryforwards and amortization deductions triggered a reassessment of the Companys ability to realize its deferred tax assets. As a result of the reassessment, the Company reduced the valuation allowance related to alternative minimum tax credits and net operating loss carryforwards by $52.6million in the third quarter of 2008.

Stock-Based Compensation

Stock-Based Compensation
	9 Months Ended Sep. 30, 2009 USD / shares
Stock-Based Compensation
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	11. Stock-Based Compensation During the nine months ended September 30, 2009, the Company granted options to purchase approximately 1.0 million shares of common stock with a weighted average exercise price of $14.08 per share and a weighted average grant-date fair value of $6.63 per share. The options fair value was determined using the Black-Scholes option pricing model, using a weighted average risk-free rate of 1.75%, a weighted average dividend yield of 2.56% and a weighted average volatility of 69.26%. The options vest ratably over four years. The options provide for the continuation of vesting for retirement-eligible recipients that meet certain criteria. The expense for these options will be recognized through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn part or all of the award. The Company also granted 35,000 shares of restricted stock during the nine months ended September 30, 2009 at a weighted average grant-date fair value of $14.05 per share. The restricted stock vests in three to four years. The Company recognized stock-based compensation expense from all plans of $3.4 million and $2.4 million for the three months ended September 30, 2009 and 2008, respectively, and $10.3 million and $10.4 million for the nine months ended September 30, 2009, and 2008, respectively. This expense is primarily included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.

Workers' Compensation Expense

Workers' Compensation Expense
	9 Months Ended Sep. 30, 2009 USD / shares
Workers' Compensation Expense
Workers' Compensation Expense [Text Block]	12. Workers Compensation Expense The following table details the components of workers compensation expense: Three Months Ended September 30 Nine Months Ended September 30 2009 2008 2009 2008 (In thousands) Self-insured occupational disease benefits: Service cost.............................................................. $ 132 $ (289) $ 398 $ 361 Interest cost.............................................................. 139 (213) 418 337 Net amortization....................................................... (719) (2,012) (2,159) (2,912) Total occupational disease...................................... (448) (2,514) (1,343) (2,214) Traumatic injury claims and assessments.............. 2,781 2,017 6,333 7,277 Total workers compensation expense................... $ 2,333 $ (497) $ 4,990 $ 5,063

Employee Benefit Plans

Employee Benefit Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Employee Benefit Plans
Pension and Other Postretirement Benefits Disclosure [Text Block]	13. Employee Benefit Plans The following table details the components of pension benefit costs: Three Months Ended September 30 Nine Months Ended September 30 2009 2008 2009 2008 (In thousands) Service cost........................................................................... $ 3,360 $ 3,388 $ 10,082 $ 9,688 Interest cost.......................................................................... 3,981 3,626 11,943 10,976 Expected return on plan assets.......................................... (4,429) (4,248) (13,289) (13,448) Amortization of prior service cost..................................... 48 (60) 145 (160) Amortization of other actuarial gains and losses............ 992 1,160 2,975 2,410 Curtailments.......................................................................... 586 $ 3,952 $ 3,866 $ 12,442 $ 9,466 The following table details the components of other postretirement benefit costs: Three Months Ended September 30 Nine Months Ended September 30 2009 2008 2009 2008 (In thousands) Service cost........................................................................... $ 815 $ 736 $ 2,446 $ 2,204 Interest cost.......................................................................... 1,009 929 3,026 2,787 Amortization of prior service cost..................................... 946 865 2,836 2,594 Amortization of other actuarial gains and losses............ (853) (911) (2,559) (2,733) $ 1,917 $ 1,619 $ 5,749 $ 4,852 In the third quarter of 2009, the Company notified participants of the retiree medical plan of a plan change increasing the retirees' responsibility for medical costs. This change resulted in a remeasurement of the postretirement benefit obligation, which included a decrease in the discount rate from 6.85% to 5.68%. The remeasurement resulted in a decrease in the liability of $21.0 million, with a corresponding increase to other comprehensive income, and will result in future reductions in costs under the plan.

Comprehensive Income

Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
Comprehensive Income
Comprehensive Income Note [Text Block]	14. Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Other comprehensive income items are transactions recorded in stockholders equity during the year, excluding net income and transactions with stockholders. The following table presents the components of comprehensive income: Three Months Ended September 30 Nine Months Ended September 30 2009 2008 2009 2008 (In thousands) Net income.................................................................................... $ 25,216 $ 98,027 $ 40,627 $ 292,719 Other comprehensive income, net of income taxes: Pension, postretirement and other post-employment benefits, net of reclassifications into net income.............. 13,729 (613) 14,631 (513) Available-for-sale securities, net of reclassifications into net income............................................................................... (38) (287) (132) 888 Unrealized gains and losses on derivatives: Unrealized losses on derivatives................................... (2,456) (12,810) (586) (2,916) Reclassifications of losses into net income................. 10,892 (2,189) 33,297 (1,556) Total comprehensive income..................................................... $ 47,343 $ 82,128 $ 87,837 $ 288,622 The change in the third quarter of 2009 in other comprehensive income relating to pension, postretirement and other post-employment benefits resulted primarily from the postretirement medical plan amendment discussed in Note 13, Employee Benefit Plans, with an offsetting adjustment to the postretirement benefit obligation liability.

Earnings Per Share

Earnings Per Share
	9 Months Ended Sep. 30, 2009 USD / shares
Earnings per Share
Earnings Per Share [Text Block]	15. Earnings per Share The following table provides the basis for earnings per share calculations by presenting the income available to common stockholders of the Company and by reconciling basic and diluted weighted average shares outstanding: Three Months Ended September 30 Nine Months Ended September 30 2009 2008 2009 2008 (In thousands) Income for basic earnings per share calculation: Net income allocated to common stockholders.................. $ 25,162 $ 97,745 $ 40,597 $ 291,684 Weighted average shares outstanding: Basic weighted average shares outstanding ...................... 155,622 144,035 147,122 143,885 Effect of common stock equivalents under incentive plans 383 863 210 917 Effect of common stock equivalents arising from Preferred Stock....................................................................... 46 Diluted weighted average shares outstanding .................. 156,005 144,898 147,332 144,848 The effect of options to purchase 2.7 million and 2.1 million shares of common stock were excluded from the calculation of diluted weighted average shares outstanding for the three and nine months ended September 30, 2009, respectively, because the exercise price of these options exceeded the average market price of the Companys common stock for these periods.

Guarantees

Guarantees
	9 Months Ended Sep. 30, 2009 USD / shares
Guarantees
Schedule of Guarantor Obligations [Text Block]	16. Guarantees The Company has agreed to continue to provide surety bonds and letters of credit for the reclamation and retiree healthcare obligations of Magnum Coal Company (Magnum) related to the properties the Company sold to Magnum on December 31, 2005. The purchase agreement requires Magnum to reimburse the Company for costs related to the surety bonds and letters of credit and to use commercially reasonable efforts to replace the obligations. If the surety bonds and letters of credit related to the reclamation obligations are not replaced by Magnum within a specified period of time, Magnum must post a letter of credit in favor of the Company in the amounts of the reclamation obligations. At September 30, 2009, the Company had approximately $91.6 million of surety bonds related to properties sold to Magnum. As a result of Magnums purchase by Patriot Coal Corporation, Magnum will be required to post letters of credit in the Companys favor for the full amount of the reclamation obligation on or before February 2011. Magnum also acquired certain coal supply contracts with customers who have not consented to the contracts assignment from the Company to Magnum. The Company has committed to purchase coal from Magnum to sell to those customers at the same price it is charging the customers for the sale. In addition, certain contracts were assigned to Magnum, but the Company has guaranteed Magnums performance under the contracts. The longest of the coal supply contracts extends to the year 2017. If Magnum is unable to supply the coal for these coal sales contracts then the Company would be required to purchase coal on the open market or supply contracts from its existing operations. At market prices effective at September 30, 2009, the cost of purchasing 13.3 million tons of coal to supply the contracts that have not been assigned over their duration would exceed the sales price under the contracts by approximately $293.8million, and the cost of purchasing 3.0 million tons of coal to supply the assigned and guaranteed contracts over their duration would exceed the sales price under the contracts by approximately $57.8 million. The Company has also guaranteed Magnums performance under certain operating leases, the longest of which extends through 2011. If the Company were required to perform under its guarantees of the operating lease agreements, it would be required to make $3.5 million of lease payments. As the Company does not believe that it is probable that it would have to purchase replacement coal or fulfill its obligations under the lease guarantees, no losses have been recorded in the condensed consolidated financial statements as of September 30, 2009. However, if the Company would have to perform under these guarantees, it could potentially have a material adverse effect on the business, results of operations and financial condition of the Company. In connection with the Companys acquisition of the coal operations of ARCO and the simultaneous combination of the acquired ARCO operations and the Companys Wyoming operations into the Arch Western joint venture, the Company agreed to indemnify the other member of Arch Western against

Contingencies

Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
Contingencies
Commitments and Contingencies Disclosure [Text Block]	17. Contingencies The Company is a party to numerous claims and lawsuits with respect to various matters. The Company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. After conferring with counsel, it is the opinion of management that the ultimate resolution of pending claims will not have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

Segment Information

Segment Information
	9 Months Ended Sep. 30, 2009 USD / shares
Segment Information
Segment Reporting Disclosure [Text Block]	18. Segment Information The Company has three reportable business segments, which are based on the major low-sulfur coal basins in which the Company operates. Each of these reportable business segments includes a number of mine complexes. The Company manages its coal sales by coal basin, not by individual mine complex. Geology, coal transportation routes to customers, regulatory environments and coal quality are generally consistent within a basin. Accordingly, market and contract pricing have developed by coal basin. Mine operations are evaluated based on their per-ton operating costs (defined as including all mining costs but excluding pass-through transportation expenses), as well as on other non-financial measures, such as safety and environmental performance. The Companys reportable segments are the Powder River Basin (PRB) segment, with operations in Wyoming; the Western Bituminous (WBIT) segment, with operations in Utah, Colorado and southern Wyoming; and the Central Appalachia (CAPP) segment, with operations in southern West Virginia, eastern Kentucky and Virginia. Operating segment results for the three and nine months ended September 30, 2009 and 2008 are presented below. Results for the operating segments include all direct costs of mining. Corporate, Other and Eliminations includes the change in fair value of coal derivatives and coal trading activities, net; corporate overhead; land management; other support functions; and the elimination of intercompany transactions. PRB WBIT CAPP Corporate, Other and Eliminations Consolidated (In thousands) Three months ended September 30, 2009 Coal sales....................................................... $ 267,455 $ 148,293 $ 199,209 $ $ 614,957 Income from operations............................... 19,465 16,349 29,694 (17,170) 48,338 Depreciation, depletion and amortization. 27,267 22,203 21,451 547 71,468 Capital expenditures..................................... 7,518 13,871 10,864 1,218 33,471 Three months ended September 30, 2008 Coal sales....................................................... $ 292,358 $ 161,085 $ 316,015 $ $ 769,458 Income from operations............................... 21,835 21,957 95,228 (51,090) 87,930 Depreciation, depletion and amortization. 29,773 18,888 23,145 379 72,185 Capital expenditures..................................... 29,433 30,016 17,221 1,375 78,045 Nine months ended September 30, 2009 Coal sales....................................................... $ 847,255 $ 382,931 $ 620,423 $ $ 1,850,609 Income from operations............................... 68,772 4,238 85,527 (64,318) 94,219 Total assets................................................... 1,896,245 2,074,320 1,164,377 (341,004) 4,793,938 Depreciation, depletion and amortization. 84,429 60,567 66,502 1,

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009
Entity Information [Line Items]
Entity Registrant Name	ARCH COAL INC
Entity Central Index Key	0001037676
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Listings [Line Items]
Entity Common Stock, Shares Outstanding	162,440,949