Arch Resources (ARCH) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

Unaudited Pro Forma Financial Information

The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2005 has been prepared as if the sale of the Contributed Properties (as described in Item 1.01 of this Current report on Form 8-K) occurred on September 30, 2005. The following Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Year Ended December 31, 2004 and Nine Months Ended September 30, 2005, respectively, have been prepared as if the sale of the Contributed Properties occurred on January 1, 2004. In accordance with pro forma accounting rules, no gain or loss from the actual divestment is reflected in the Unaudited Pro Forma Condensed Consolidated Statements of Operations.

The unaudited pro forma financial information was prepared in accordance with Article 11 of the United States Securities and Exchange Commission Regulation S-X. The historical pro forma financial information as of September 30, 2005 and for the nine months ended September 30, 2005 was derived from the financial statements included in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2005. The historical pro forma financial information for the year ended December 31, 2004 was derived from the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. The unaudited pro forma financial information should be read in conjunction with these reports. The unaudited pro forma financial information and the related notes are provided for information purposes only and do not purport to be indicative of the results which would have been obtained by Arch Coal, Inc. had the Contributed Properties been sold on the dates indicated or which may be expected to occur in the future. The operating results of the Contributed Properties for the nine months ended September 30, 2005 and year ended December 31, 2004 represent the revenues and directly related expenses only of the sales contracts and related operations of the Contributed Properties and do not purport to represent all the costs, expenses and results associated with a stand-alone, separate company.

Arch Coal, Inc. and Subsidiaries
Unaudited Pro-Forma Condensed Consolidated Balance Sheets
(In thousands)

	September 30, 2005
	Arch Coal, Inc			Sale of Contributed
	Historical			Properties (1)			Pro-Forma
Assets
Current assets
Cash and cash equivalents	$	227,428		$	(27	)	$	227,401
Trade receivables		252,031			(55,089	)		196,942
Other receivables		30,377			(5,309	)		25,068
Inventories		142,012			(25,392	)		116,620
Other		42,631			(12,257	)		30,374
Total current assets		694,479			(98,074	)		596,405
Property, plant and equipment, net		2,117,463			(307,551	)		1,809,912
Other assets		533,960			(3,595	)		530,365
Total assets	$	3,345,902		$	(409,220	)	$	2,936,682
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	183,526		$	(24,234	)	$	159,292
Accrued expenses		213,009			(51,687	)		161,322
Current portion of debt		3,124			—			3,124
Total current liabilities		399,659			(75,921	)		323,738
Long-term debt		972,875			—			972,875
Accrued postretirement benefits other than pension		402,073			(345,306	)		56,767
Asset retirement obligations		184,538			(30,165	)		154,373
Workers’ compensation		74,698			(28,932	)		45,766
Other noncurrent liabilities		144,055			(15,675	)		128,380
Total liabilities		2,177,898			(495,999	)		1,681,899
Stockholders’ equity
Preferred stock		29			—			29
Common stock		647			—			647
Paid-in capital		1,343,082			—			1,343,082
Retained deficit		(157,979	)		86,779			(71,200	)
Unearned compensation		(3,140	)		—			(3,140	)
Treasury stock, at cost		(1,190	)		—			(1,190	)
Accumulated other comprehensive loss		(13,445	)		—			(13,445	)
Total stockholders’ equity		1,168,004			86,779			1,254,783
Total liabilities and stockholders’ equity	$	3,345,902		$	(409,220	)	$	2,936,682

(1) To reflect the removal of account balances associated with the Contributed Properties.

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Arch Coal, Inc. and Subsidiaries
Unaudited Pro-Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)

	Year Ended
	December 31, 2004
	Arch Coal, Inc.			Sale of Contributed
	Historical			Properties (1)			Pro-Forma
Revenues
Coal sales	$	1,907,168		$	(386,150	)	$	1,521,018
Costs and expenses
Cost of coal sales		1,638,284			(358,524	)		1,279,760
Depreciation, depletion and amortization		166,322			(32,849	)		133,473
Selling, general and administrative expenses		52,842			—			52,842
Long-term incentive compensation expense		5,495			—			5,495
Other expenses		35,758			(900	)		34,858
		1,898,701			(392,273	)		1,506,428
Other operating income
Income from equity investments		10,828			—			10,828
Gain on sale of units of Natural Resource Partners, LP		91,268			—			91,268
Other operating income		67,483			(2,850	)		64,633
		169,579			(2,850	)		166,729
Income from operations		178,046			3,273			181,319
Interest expense, net:
Interest expense		(62,634	)		—			(62,634	)
Interest income		6,130			—			6,130
		(56,504	)		—			(56,504	)
Other non-operating income (expense):
Expenses resulting from early debt extinguishment and termination of hedge accounting for interest rate swaps		(9,010	)		—			(9,010	)
Other non-operating income (expense)		1,044			—			1,044
		(7,966	)		—			(7,966	)
Income before income taxes		113,576			3,273			116,849
(Benefit from) provision for income taxes		(130	)		4			(126	)
Net income		113,706			3,269			116,975
Preferred stock dividends		(7,187	)		—			(7,187	)
Net income available to common shareholders	$	106,519		$	3,269		$	109,788
Earnings per common share
Basic earnings per common share	$	1.91					$	1.97
Diluted earnings per common share	$	1.78					$	1.83

(1) To reflect the removal of the Contributed Properties’ results of operations.

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Arch Coal, Inc. and Subsidiaries
Unaudited Pro-Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)

	Nine Months Ended
	September 30, 2005
	Arch Coal, Inc.			Sale of Contributed
	Historical			Properties (1)			Pro-Forma
Revenues
Coal sales	$	1,888,978		$	(275,861	)	$	1,613,117
Costs and expenses
Cost of coal sales		1,608,439			(254,606	)		1,353,833
Depreciation, depletion and amortization		160,887			(25,031	)		135,856
Selling, general and administrative expenses		60,540			—			60,540
Other expenses		40,695			(632	)		40,063
		1,870,561			(280,269	)		1,590,292
Other operating income
Income from equity investments		—			—			—
Gain on sale of units of Natural Resource Partners, LP		—			—			—
Other operating income		63,206			(2,371	)		60,835
		63,206			(2,371	)		60,835
Income from operations		81,623			2,037			83,660
Interest expense, net:
Interest expense		(55,454	)		—			(55,454	)
Interest income		5,635			—			5,635
		(49,819	)		—			(49,819	)
Other non-operating income (expense):
Expenses resulting from early debt extinguishment and termination of hedge accounting for interest rate swaps		(6,082	)		—			(6,082	)
Other non-operating income (expense)		(1,497	)		—			(1,497	)
		(7,579	)		—			(7,579	)
Income before income taxes		24,225			2,037			26,262
(Benefit from) provision for income taxes		(4,750	)		399			(4,351	)
Net income		28,975			1,638			30,613
Preferred stock dividends		(5,391	)		—			(5,391	)
Net income available to common shareholders	$	23,584		$	1,638		$	25,222
Earnings per common share
Basic earnings per common share	$	0.37					$	0.40
Diluted earnings per common share	$	0.37					$	0.40

(1) To reflect the removal of the Contributed Properties’ results of operations

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