Arch Resources (ARCH) 8-K Other Events

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     The following unaudited pro forma condensed combined financial information is based on the historical financial information of Arch Coal, Inc. (“Arch Coal”) and International Coal Group, Inc. (“ICG”) and has been prepared to reflect the proposed merger of Atlas Acquisition Corp. (“Merger Sub”) with and into ICG and the related financing transactions. The pro forma data in the unaudited pro forma condensed combined balance sheet as of March 31, 2011 assume that the proposed merger of Merger Sub with and into ICG was completed on that date. The data in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and the three months ended March 31, 2011 assume the proposed merger was completed at the beginning of each period.

     The unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements and related notes thereto of Arch Coal and ICG.

     The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of the financial position or results of operations of Arch Coal had the transactions actually occurred on the dates assumed in the unaudited pro forma condensed combined financial statements.

     The proposed merger of Merger Sub with and into ICG will be accounted for under the acquisition method of accounting under U.S. GAAP whereby the total purchase price is allocated to the assets acquired and liabilities assumed based on their respective fair values at the acquisition date. The cash purchase price will be determined based on the number of common shares of ICG tendered plus the fair value of liabilities incurred in conjunction with the merger. The estimated purchase price for this unaudited pro forma condensed combined financial information assumes that all shares of ICG common stock outstanding on March 31, 2011 were tendered. At this time, Arch Coal has not performed detailed valuation analyses to determine the fair values of ICG’s assets and liabilities; and accordingly, the unaudited pro forma condensed combined financial information includes a preliminary allocation of the purchase price based on assumptions and estimates which, while considered reasonable under the circumstances, are subject to changes, which may be material. Additionally, Arch Coal has not yet performed all of the due diligence necessary to identify items that could significantly impact the purchase price allocation or the assumptions and adjustments made in preparation of this unaudited pro forma condensed combined financial information. Upon determination of the fair value of assets acquired and liabilities assumed, there may be additional increases or decreases to the recorded book values of ICG’s assets and liabilities, including, but not limited to, mineral reserves, property, plant and equipment, asset retirement obligations, coal supply agreements, commitments and contingencies and other intangible assets that will give rise to future amounts of depletion, depreciation and amortization expenses or credits that are not reflected in the information contained in this unaudited pro forma condensed combined financial information. Accordingly, once the necessary due diligence has been performed, the final purchase price has been determined and the purchase price allocation has been completed, actual results may differ materially from the information presented in this unaudited pro forma condensed combined financial information. Additionally, this unaudited pro forma condensed combined statement of operations does not reflect the cost of any integration activities or benefits from the merger and synergies that may be derived from any integration activities, both of which may have a material effect on the results of operations in periods following the completion of the merger.

     Certain amounts in ICG’s historical balance sheets and statements of income have been conformed to Arch Coal’s presentation.

ARCH COAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2010
(In thousands)

							Pro Forma			Pro Forma
							Adjustments			Adjustments
	Arch Coal			ICG			Related to			Related to
	Historical			Historical			Financing			Merger			Pro Forma
Revenues
Coal sales	$	3,186,268		$	1,113,657		$	—		$	—		$	4,299,925
Costs, expenses and other
Cost of coal sales		2,395,812			885,739			—			—			3,281,551
Depreciation, depletion and amortization		365,066			107,682			—			37,802	(f)		510,550
Amortization of acquired sales contracts, net		35,606			(3,116	)		—			(11,015	)(g)		21,475
Selling, general and administrative expenses		118,177			35,569			—			—			153,746
Change in fair value of coal derivatives and coal trading activities, net		8,924			—			—			—			8,924
Gain on Knight Hawk transaction		(41,577	)		—			—			—			(41,577	)
Other operating income, net		(19,724	)		(8,726	)					—			(28,450	)
		2,862,284			1,017,148			—			26,787			3,906,219
Income from operations		323,984			96,509			—			(26,787	)		393,706
Interest expense, net:		(140,100	)		(40,736	)		(164,836	)(h)		40,736	(h)		(304,936	)
Other non-operating expense
Loss on early extinguishment of debt		(6,776	)		(29,409	)		—			—			(36,185	)
Income (loss) before income taxes		177,108			26,364			(164,836	)		13,949			52,585
Provision for (benefit from) income taxes		17,714			(3,750	)		(61,814	)(i)		5,231	(i)		(42,619	)
Net income		159,394			30,114			(103,022	)		8,718			95,204
Less: Net income attributable to noncontrolling interest		(537	)		(3	)		—			—			(540	)
Net income attributable to Arch Coal, Inc.	$	158,857		$	30,111		$	(103,022	)	$	8,718		$	94,664
Earnings per common share
Basic earnings per common share (j)	$	0.98											$	0.46
Diluted earnings per common share (j)	$	0.97											$	0.46
Weighted average shares outstanding
Basic		162,398						44,000	(a)					206,398
Diluted		163,210						44,000	(a)					207,210

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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ARCH COAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2011
(In thousands)

							Pro Forma			Pro Forma
							Adjustments			Adjustments
	Arch Coal			ICG			Related to			Related to
	Historical			Historical			Financing			Merger			Pro Forma
Revenues
Coal sales	$	872,938		$	290,863		$	—		$	—		$	1,163,801
Costs, expenses and other
Cost of coal sales		653,684			225,116			—			—			878,800
Depreciation, depletion and amortization		83,537			26,545			—			12,107	(f)		122,189
Amortization of acquired sales contracts, net		5,944			(889	)		—			(2,644	)(g)		2,411
Selling, general and administrative expenses		30,435			51,152			—			—			81,587
Change in fair value of coal derivatives and coal trading activities, net		(1,784	)		—			—			—			(1,784	)
Gain on Knight Hawk transaction		—			—			—			—			—
Other operating income, net		(1,116	)		(10,507	)		—			—			(11,623	)
		770,700			291,417			—			9,463			1,071,580
Income from operations		102,238			(554	)		—			(9,463	)		92,221
Interest expense, net:		(33,834	)		(8,110	)		(41,209	)(h)		8,110	(h)		(75,043	)
Income (loss) before income taxes		68,404			(8,664	)		(41,209	)		(1,353	)		17,178
Provision for (benefit from) income taxes		12,530			(2,357	)		(15,453	)(i)		(507	)(i)		(5,788	)
Net income (loss)		55,874			(6,307	)		(25,756	)		(846	)		22,966
Less: Net income attributable to noncontrolling interest		(273	)		(11	)		—			—			(284	)
Net income (loss) attributable to Arch Coal, Inc.	$	55,601		$	(6,318	)	$	(25,756	)	$	(846	)	$	22,682
Earnings per common share
Basic earnings per common share (j)	$	0.34											$	0.11
Diluted earnings per common share (j)	$	0.34											$	0.11
Weighted average shares outstanding
Basic		162,576						44,000	(a)					206,576
Diluted		163,773						44,000	(a)					207,773

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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ARCH COAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
MARCH 31, 2011
(In thousands)

							Pro Forma			Pro Forma
							Adjustments			Adjustments
	Arch Coal			ICG			Related to			Related to
	Historical			Historical			Financing(a)			Merger			Pro Forma
Assets
Current assets
Cash and cash equivalents	$	69,220		$	186,566		$	3,680,538		$	(3,075,827	) (b)
											(604,711	) (c)	$	255,786
Accounts receivable		303,317			111,210			—			—			414,527
Inventories		247,908			80,724			—			—			328,632
Prepaid royalties		42,719			6,737			—			—			49,456
Deferred income taxes		18,673			1,420			—			—			20,093
Coal derivative assets		15,952			—			—			—			15,952
Other		101,153			14,704			—			(2,562	) (b)		113,295
Total current assets		798,942			401,361			3,680,538			(3,683,100	)		1,197,741
Property, plant and equipment, net		3,263,555			1,051,064			—			3,563,977	(b)		7,878,596
Other assets
Prepaid royalties		69,737			21,639			—			—			91,376
Goodwill		114,963			—			—			425,000	(b)		539,963
Deferred income taxes		331,242			—			—			—			331,242
Equity investments		204,424			—			—			—			204,424
Other		117,115			20,945			61,800			(8,937	) (b)
		—			—			—			(2,759	) (b)		188,164
Total other assets		837,481			42,584			61,800			413,304			1,355,169
Total assets	$	4,899,978		$	1,495,009		$	3,742,338			294,181		$	10,431,506
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	183,866		$	80,294			—			—		$	264,160
Coal derivative liabilities		4,178			—			—			—			4,178
Accrued expenses and other current liabilities		228,165			59,777			—			(582	) (c)		—
		—			—			—			2,903	(b)		290,263
Current maturities of debt and short-term borrowings		69,518			105,125			—			(105,125	) (c)		69,518
Total current liabilities		485,727			245,196			—			(102,804	)		628,119
Long-term debt		1,539,028			228,437			2,538,178			363,851	(b)
											(592,288	) (c)		4,077,206
Asset retirement obligations		336,975			71,541			—			—			408,516
Accrued pension and postretirement benefits		111,692			84,129			—			—			195,821
Deferred income taxes		—			46,515			—			1,340,766	(b)		1,387,281
Other noncurrent liabilities		124,243			69,855			—			2,903	(b)
		—			—			—			74,066	(b)		271,067
Total liabilities		2,597,665			745,673			2,538,178			1,086,494			6,968,010
Redeemable noncontrolling interest		10,718			—			—			—			10,718
Stockholders’ equity
Common stock — Arch Coal		1,647			—			440			—			2,087
Common stock — ICG		—			2,042						(2,042	) (d)		—
Paid-in capital		1,740,765			852,812			1,253,120			(852,812	) (d)		2,993,885
Treasury stock, at cost		(53,848	)		(309	)					309	(d)		(53,848	)
Retained earnings		600,751			(101,920	)		(49,400	)		—	(d)		—
		—			—			—			(31,200	) (e)		—
		—			—			—			(11,499	) (b)		—
		—			—			—			(11,841	) (c)		—
		—			—			—			113,419	(d)		508,310
Accumulated other comprehensive income (loss)		2,280			(3,353	)		—			3,353	(d)		2,280
Total stockholders’ equity attributable to controlling interest		2,291,595			749,272			1,204,160			(792,313	)		3,452,714
Noncontrolling interest		—			64			—			—			64
Total stockholders’ equity		2,291,595			749,336			1,204,160			(792,313	)		3,452,778
Total liabilities and stockholders’ equity	$	4,899,978		$	1,495,009		$	3,742,338		$	294,181		$	10,431,506

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Amounts in thousands, except per share data)

Note 1. Basis of Presentation

     The unaudited pro forma condensed combined financial information is based on the historical financial information of Arch Coal and ICG and has been prepared to reflect the proposed merger of Merger Sub with and into ICG and the related financing transactions. The pro forma data in the unaudited pro forma condensed combined balance sheet as of March 31, 2011 assume that the proposed merger of Merger Sub with and into ICG was completed on that date. The data in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and the three months ended March 31, 2011 assume the proposed merger was completed at the beginning of each period.

     Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are directly attributable to the proposed merger and related financing transactions and are factually supportable. Pro forma adjustments reflected in the unaudited pro forma condensed combined statements of operations are based on items directly attributable to the proposed merger, factually supportable and expected to have a continuing impact on Arch Coal. As a result, the unaudited pro forma condensed combined statements of operations exclude acquisition costs and other costs that will not have a continuing impact on Arch Coal, although these items are reflected in the unaudited pro forma condensed combined balance sheet.

     At this time, Arch Coal has not performed a detailed valuation to determine the fair values of ICG’s assets and liabilities and accordingly, the unaudited pro forma condensed combined financial information was developed using a preliminary allocation of the estimated purchase price based on assumptions and estimates which are subject to changes that may be material. Additionally, Arch Coal has not yet performed all of the due diligence necessary to identify additional items that could significantly impact the purchase price allocation or the assumptions and adjustments made in preparation of this unaudited pro forma condensed combined financial information.

     Upon completion of a detailed valuation analysis, there may be additional increases or decreases to the recorded book values of ICG’s assets and liabilities, including, but not limited to, mineral reserves, property and equipment, coal supply agreements, asset retirement obligations, commitments and contingencies and other intangible assets that will give rise to future amounts of depletion, depreciation and amortization expenses or credits that are not reflected in this unaudited pro forma condensed combined financial information. Accordingly, once the necessary due diligence is performed, the final purchase price is determined and the purchase price allocation is completed actual results may differ materially from the information presented in this unaudited pro forma condensed combined financial information. Additionally, the unaudited pro forma condensed combined statement of operations does not reflect the cost of any integration activities or benefits from the merger and synergies that may be derived from any integration activities, both of which may have a material impact on the results of operations in periods following the completion of the merger.

     Certain amounts in ICG’s historical balance sheet and statements of income have been conformed to Arch Coal’s presentation.

Note 2. Preliminary Purchase Price

     Arch Coal is proposing to acquire all of the outstanding shares of ICG for cash at a price of $14.60 for each outstanding share of ICG Common Stock. Arch Coal intends to finance the cash portion of the purchase consideration by issuing additional debt and equity securities and by borrowing amounts under its amended and restated senior secured credit facility.

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     The preliminary estimated purchase price of the proposed merger is as follows:

Estimated number of ICG outstanding shares to be acquired (in thousands)		204,162
Cash purchase price	$	14.6
	$	2,980,764
Settlement of share-based payment awards		63,863
Cash merger consideration		3,044,627
Change of control payment	$	5,806
Cash merger consideration	$	3,050,433

Reflects the payment of the preliminary estimated purchase price of $3,044,627, including the settlement of employee stock options. The consideration for the merger also includes a liability incurred for a change in control payment to ICG’s current Chief Executive Officer per the terms of his employment contract, which are included in the consideration for the merger.

Note 3. Pro Forma Adjustments

(a)

Represents the pro forma adjustments to reflect the financing for the merger, consisting of: (1) the proceeds from the issuance of notes of $2,000,000, less financing costs of $41,800; (2) the concurrent offering of 44 million shares of our common stock at an assumed offering price of $29.60 per share, net of related costs of $48,840; and (3) $538,178 borrowed under our amended and restated senior secured credit facility to finance these transactions and pay estimated financing fees of $20,000.

(b)

Reflects allocation of purchase price to record amounts at their estimated fair value. Management has used certain estimates and assumptions in estimating fair value, however, a detailed analysis has not been performed on the individual assets and liabilities of ICG and actual results may differ materially from these estimates. The adjustment to property, plant and equipment was estimated using benchmark studies of similar acquisitions, and the adjustment to goodwill was estimated at the present value of forecasted synergies that may be realized in the merger. The fair value of long-term debt was estimated using market rates as of May 27, 2011. The adjustment to owned and leased mineral rights was estimated as the remaining amount of purchase price to be allocated after all other adjustments have been made. The detailed estimated preliminary purchase price allocation is as follows:

Book value of ICG’s net assets attributable to the controlling interest as of December 31, 2010	$	749,272
Adjustment to fair value property, plant and equipment, including mineral rights		3,563,977
Adjustment to write-off value of ICG’s deferred financing fees		(11,499	)
Adjustment to fair value of sales contracts		(76,825	)
Adjustment to fair value long-term debt		(258,726	)
Adjustment to accrued severance obligation		(5,806	)
Adjustment to deferred income taxes to reflect the tax impact of fair value adjustments		(1,340,766	)
Estimated fair value of net assets and liabilities to be acquired		2,619,627
Preliminary allocation to goodwill		425,000
Estimated purchase price	$	3,044,627

(c)	Reflects the pro forma adjustment associated with the repayment of the outstanding principal, accrued interest and repayment premiums for ICG’s 9.125% senior secured notes and convertible senior notes and the related loss of $11,841. We assume that the 9.15% senior secured notes are redeemed at their principal amount of $200,000 plus a “make-whole” premium of $51,600, and that the convertible senior notes are all converted into shares of common stock at an increased conversion rate.
(d)	Reflects the elimination of ICG’s historical stockholders’ equity balances.
(e)	Reflects the payment and expensing of $31,200 million of acquisition-related costs.
(f)	Reflects the estimated impact on depreciation, depletion and amortization for the fair value adjustment for property, plant and equipment and owned and leased mineral rights using an estimated useful remaining life of five years for property, plant and equipment and an estimated depletion rate applied to the actual 2010 ICG production. Arch Coal has not performed a detailed analysis of the fair values of ICG’s property, plant and equipment or mineral reserves and therefore, the actual fair values assigned may differ materially and the impact on depreciation, depletion and amortization expense may also be materially different than the estimates provided herein.

(g)	Reflects the estimated impact on amortization for the fair value adjustment of acquired sales contracts. Arch Coal is still reviewing the contracts acquired, and therefore, the actual fair values assigned may differ materially and the impact on amortization expense may also be materially different than the estimates provided herein.
(h)	Reflects the impact of the refinancing of debt and the merger on interest expense. The interest rates used were estimates based on current prevailing interest rates. A 0.125% increase or decrease to the interest rates used would increase or decrease pro forma interest expense by approximately $3,200 on an annual basis and $790 on a quarterly basis. The adjustment also includes the amortization of deferred financing fees associated with our new senior notes and our amended and restated senior secured credit facility.
(i)	Reflects the income tax effect of pro forma adjustments calculated at an estimated rate of 37.5%.
(j)	Pro forma basic earnings per common share has been calculated based on the expected number of shares assumed to be outstanding, assuming such shares were outstanding for the full period presented.

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