Supplemental Consolidating Financial Information | 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, 2015 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 644,462 $ — $ — $ 644,462 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 5,908 561,191 — (847 ) 566,252 Depreciation, depletion and amortization 1,013 96,359 — — 97,372 Amortization of acquired sales contracts, net — (1,644 ) — — (1,644 ) Change in fair value of coal derivatives and coal trading activities, net — 1,211 — — 1,211 Asset impairment and mine closure costs 1,225 17,921 — — 19,146 Selling, general and administrative expenses 17,166 6,270 1,325 (493 ) 24,268 Other operating (income) expense, net (138 ) 7,483 (1,282 ) 1,340 7,403 25,174 688,791 43 — 714,008 Loss from investment in subsidiaries (30,462 ) — — 30,462 — Loss from operations (55,636 ) (44,329 ) (43 ) 30,462 (69,546 ) Interest expense, net Interest expense (119,231 ) (6,576 ) (1,127 ) 27,360 (99,574 ) Interest and investment income 6,675 20,256 1,391 (27,360 ) 962 (112,556 ) 13,680 264 — (98,612 ) Expenses related to debt restructuring (4,016 ) — — — (4,016 ) Income (loss) from continuing operations before income taxes (172,208 ) (30,649 ) 221 30,462 (172,174 ) Provision for (benefit from) income taxes (4,105 ) — 34 — (4,071 ) Net income (loss) $ (168,103 ) $ (30,649 ) $ 187 $ 30,462 $ (168,103 ) Total comprehensive income (loss) $ (167,887 ) $ (30,811 ) $ 187 $ 30,624 $ (167,887 ) 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 and mine closure costs 1,512 — — — 1,512 Selling, general and administrative expenses 21,729 7,250 1,489 (537 ) 29,931 Other operating (income) expense, net (1,883 ) 1,554 (1,320 ) 1,417 (232 ) 26,251 723,152 178 — 749,581 Income 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 ) Provision for (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 Six Months Ended June 30, 2015 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 1,321,467 $ — $ — $ 1,321,467 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 13,378 1,116,877 — (1,681 ) 1,128,574 Depreciation, depletion and amortization 2,073 200,171 2 — 202,246 Amortization of acquired sales contracts, net — (5,034 ) — — (5,034 ) Change in fair value of coal derivatives and coal trading activities, net — 2,431 — — 2,431 Asset impairment and mine closure costs 1,225 17,921 — — 19,146 Selling, general and administrative expenses 32,605 12,514 2,773 (1,019 ) 46,873 Other operating (income) expense, net 3,562 12,760 (2,533 ) 2,700 16,489 52,843 1,357,640 242 — 1,410,725 Loss from investment in subsidiaries (9,413 ) — — 9,413 — Loss from operations (62,256 ) (36,173 ) (242 ) 9,413 (89,258 ) Interest expense, net Interest expense (237,286 ) (13,340 ) (2,402 ) 54,202 (198,826 ) Interest and investment income 14,747 40,030 2,760 (54,202 ) 3,335 (222,539 ) 26,690 358 — (195,491 ) Expenses related to debt restructuring (4,016 ) — — — (4,016 ) Income (loss) from continuing operations before income taxes (288,811 ) (9,483 ) 116 9,413 (288,765 ) Provision for (benefit from) income taxes (7,513 ) — 46 — (7,467 ) Net income (loss) $ (281,298 ) $ (9,483 ) $ 70 $ 9,413 $ (281,298 ) Total comprehensive income (loss) $ (277,478 ) $ (6,405 ) $ 70 $ 6,335 $ (277,478 ) 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 and mine closure costs 1,512 — — — 1,512 Selling, general and administrative expenses 41,673 15,115 3,292 (1,013 ) 59,067 Other operating (income) expense, 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 Balance Sheets June 30, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Assets Cash and cash equivalents $ 367,668 $ 60,568 $ 11,419 $ — $ 439,655 Short term investments 249,754 — — — 249,754 Restricted cash — — 43,563 — 43,563 Receivables 9,525 10,352 204,002 (4,338 ) 219,541 Inventories — 223,929 — — 223,929 Other 80,295 39,160 1,024 — 120,479 Total current assets 707,242 334,009 260,008 (4,338 ) 1,296,921 Property, plant and equipment, net 9,211 6,331,424 — 391 6,341,026 Investment in subsidiaries 7,448,526 — — (7,448,526 ) — Intercompany receivables — 2,164,803 — (2,164,803 ) — Note receivable from Arch Western 675,000 — — (675,000 ) — Other 119,670 277,555 1,183 — 398,408 Total other assets 8,243,196 2,442,358 1,183 (10,288,329 ) 398,408 Total assets $ 8,959,649 $ 9,107,791 $ 261,191 $ (10,292,276 ) $ 8,036,355 Liabilities and Stockholders’ Equity Accounts payable $ 12,096 $ 144,588 $ 41 $ — $ 156,725 Accrued expenses and other current liabilities 59,336 207,265 695 (4,338 ) 262,958 Current maturities of debt 21,651 10,112 — — 31,763 Total current liabilities 93,083 361,965 736 (4,338 ) 451,446 Long-term debt 5,078,125 36,456 — — 5,114,581 Intercompany payables 1,930,704 — 234,099 (2,164,803 ) — Note payable to Arch Coal — 675,000 — (675,000 ) — Asset retirement obligations 1,018 408,417 — — 409,435 Accrued pension benefits 5,023 8,557 — — 13,580 Accrued postretirement benefits other than pension 4,298 29,878 — — 34,176 Accrued workers’ compensation 10,714 86,775 — — 97,489 Deferred income taxes 411,930 — — — 411,930 Other noncurrent liabilities 31,120 78,332 241 — 109,693 Total liabilities 7,566,015 1,685,380 235,076 (2,844,141 ) 6,642,330 Stockholders’ equity 1,393,634 7,422,411 26,115 (7,448,135 ) 1,394,025 Total liabilities and stockholders’ equity $ 8,959,649 $ 9,107,791 $ 261,191 $ (10,292,276 ) $ 8,036,355 Condensed Consolidating Balance Sheets December 31, 2014 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Assets Cash and cash equivalents $ 572,185 $ 150,358 $ 11,688 $ — $ 734,231 Short term investments 248,954 — — — 248,954 Restricted cash — — 5,678 — 5,678 Receivables 9,656 15,933 211,043 (4,615 ) 232,017 Inventories — 190,253 — — 190,253 Other 89,211 41,455 952 — 131,618 Total current assets 920,006 397,999 229,361 (4,615 ) 1,542,751 Property, plant and equipment, net 10,470 6,442,623 2 363 6,453,458 Investment in subsidiaries 7,464,221 — — (7,464,221 ) — Intercompany receivables — 2,021,110 — (2,021,110 ) — Note receivable from Arch Western 675,000 — — (675,000 ) — Other 131,884 300,058 1,572 — 433,514 Total other assets 8,271,105 2,321,168 1,572 (10,160,331 ) 433,514 Total assets $ 9,201,581 $ 9,161,790 $ 230,935 $ (10,164,583 ) $ 8,429,723 Liabilities and Stockholders’ Equity Accounts payable $ 23,394 $ 156,664 $ 55 $ — $ 180,113 Accrued expenses and other current liabilities 85,899 220,017 1,095 (4,615 ) 302,396 Current maturities of debt 27,625 9,260 — — 36,885 Total current liabilities 136,918 385,941 1,150 (4,615 ) 519,394 Long-term debt 5,084,839 38,646 — — 5,123,485 Intercompany payables 1,817,755 — 203,355 (2,021,110 ) — Note payable to Arch Coal — 675,000 — (675,000 ) — Asset retirement obligations 981 397,915 — — 398,896 Accrued pension benefits 5,967 10,293 — — 16,260 Accrued postretirement benefits other than pension 4,430 28,238 — — 32,668 Accrued workers’ compensation 9,172 85,119 — — 94,291 Deferred income taxes 422,809 — — — 422,809 Other noncurrent liabilities 50,919 102,461 386 — 153,766 Total liabilities 7,533,790 1,723,613 204,891 (2,700,725 ) 6,761,569 Stockholders’ equity 1,667,791 7,438,177 26,044 (7,463,858 ) 1,668,154 Total liabilities and stockholders’ equity $ 9,201,581 $ 9,161,790 $ 230,935 $ (10,164,583 ) $ 8,429,723 Condensed Consolidating Statements of Cash Flows Six Months Ended June 30, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (295,792 ) $ 163,345 $ 6,872 $ — $ (125,575 ) Investing Activities Capital expenditures (815 ) (98,546 ) — — (99,361 ) Additions to prepaid royalties — (409 ) — — (409 ) Proceeds from disposals and divestitures — 991 — — 991 Purchases of marketable securities (161,336 ) — — — (161,336 ) Proceeds from sale or maturity of marketable securities and other investments 157,729 — — — 157,729 Investments in and advances to affiliates (788 ) (4,350 ) — — (5,138 ) Cash used in investing activities (5,210 ) (102,314 ) — — (107,524 ) Financing Activities Payments on term loan (9,750 ) — — — (9,750 ) Net payments on other debt (5,973 ) (3,853 ) — — (9,826 ) Expenses related to debt restructuring (4,016 ) — — — (4,016 ) Withdrawals (deposits) of restricted cash — — (37,885 ) — (37,885 ) Transactions with affiliates, net 116,224 (146,968 ) 30,744 — — Cash provided by (used in) financing activities 96,485 (150,821 ) (7,141 ) — (61,477 ) Decrease in cash and cash equivalents (204,517 ) (89,790 ) (269 ) — (294,576 ) Cash and cash equivalents, beginning of period 572,185 150,358 11,688 — 734,231 Cash and cash equivalents, end of period $ 367,668 $ 60,568 $ 11,419 $ — $ 439,655 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 ) Additions to prepaid 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 ) Debt financing costs (1,957 ) — — — (1,957 ) Net payments on other debt (7,547 ) (1,843 ) — — (9,390 ) 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 |