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 September 30, 2015 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 688,544 $ — $ — $ 688,544 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 3,211 537,471 — (490 ) 540,192 Depreciation, depletion and amortization 896 103,069 — — 103,965 Amortization of acquired sales contracts, net — (1,994 ) — — (1,994 ) Change in fair value of coal derivatives and coal trading activities, net — (3,559 ) — — (3,559 ) Asset impairment and mine closure costs 21,292 2,099,000 — — 2,120,292 Losses from disposed operations resulting from Patriot Coal bankruptcy 149,314 — — 149,314 Selling, general and administrative expenses 18,059 6,725 1,489 (542 ) 25,731 Other operating (income) expense, net 3,503 (12,343 ) (817 ) 1,032 (8,625 ) 196,275 2,728,369 672 — 2,925,316 Loss from investment in subsidiaries (2,025,900 ) — — 2,025,900 — Loss from operations (2,222,175 ) (2,039,825 ) (672 ) 2,025,900 (2,236,772 ) Interest expense, net Interest expense (120,404 ) (6,629 ) (1,199 ) 28,473 (99,759 ) Interest and investment income 6,710 20,781 1,654 (28,473 ) 672 (113,694 ) 14,152 455 — (99,087 ) Expenses related to debt restructuring (7,482 ) — — — (7,482 ) Income (loss) from continuing operations before income taxes (2,343,351 ) (2,025,673 ) (217 ) 2,025,900 (2,343,341 ) Provision for (benefit from) income taxes (343,875 ) — 10 — (343,865 ) Net income (loss) $ (1,999,476 ) $ (2,025,673 ) $ (227 ) $ 2,025,900 $ (1,999,476 ) Total comprehensive income (loss) $ (2,000,570 ) $ (2,026,697 ) $ (227 ) $ 2,026,924 $ (2,000,570 ) Condensed Consolidating Statements of Operations Three Months Ended September 30, 2014 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 742,180 $ — $ — $ 742,180 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 2,442 645,672 — (1,018 ) 647,096 Depreciation, depletion and amortization 1,175 103,971 9 — 105,155 Amortization of acquired sales contracts, net — (3,013 ) — — (3,013 ) Change in fair value of coal derivatives and coal trading activities, net — (3,733 ) — — (3,733 ) Asset impairment and mine closure costs — 5,060 — — 5,060 Selling, general and administrative expenses 19,542 7,427 1,679 (512 ) 28,136 Other operating (income) expense, net 1,562 (2,942 ) (1,371 ) 1,530 (1,221 ) 24,721 752,442 317 — 777,480 Income from investment in subsidiaries 2,005 — — (2,005 ) — Loss from operations (22,716 ) (10,262 ) (317 ) (2,005 ) (35,300 ) Interest expense, net Interest expense (116,742 ) (6,577 ) (1,116 ) 26,218 (98,217 ) Interest and investment income 7,872 18,987 1,308 (26,218 ) 1,949 (108,870 ) 12,410 192 — (96,268 ) Income (loss) from continuing operations before income taxes (131,586 ) 2,148 (125 ) (2,005 ) (131,568 ) Provision for (benefit from) income taxes (34,368 ) — (21 ) — (34,350 ) Net loss $ (97,218 ) $ 2,148 $ (104 ) $ (2,005 ) $ (97,218 ) Total comprehensive income (loss) $ (99,197 ) $ 1,717 $ (143 ) $ (1,574 ) $ (99,197 ) Condensed Consolidating Statements of Operations Nine Months Ended September 30, 2015 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 2,010,011 $ — $ — $ 2,010,011 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 16,589 1,654,348 — (2,171 ) 1,668,766 Depreciation, depletion and amortization 2,969 303,240 2 — 306,211 Amortization of acquired sales contracts, net — (7,028 ) — — (7,028 ) Change in fair value of coal derivatives and coal trading activities, net — (1,128 ) — — (1,128 ) Asset impairment and mine closure costs 22,517 2,116,921 — — 2,139,438 Losses from disposed operations resulting from Patriot Coal bankruptcy 149,314 — — — 149,314 Selling, general and administrative expenses 50,664 19,239 4,262 (1,561 ) 72,604 Other operating (income) expense, net 7,065 417 (3,350 ) 3,732 7,864 249,118 4,086,009 914 — 4,336,041 Loss from investment in subsidiaries (2,035,313 ) — — 2,035,313 — Loss from operations (2,284,431 ) (2,075,998 ) (914 ) 2,035,313 (2,326,030 ) Interest expense, net Interest expense (357,690 ) (19,969 ) (3,601 ) 82,675 (298,585 ) Interest and investment income 21,457 60,811 4,414 (82,675 ) 4,007 (336,233 ) 40,842 813 — (294,578 ) Expenses related to debt restructuring (11,498 ) — — — (11,498 ) Income (loss) from continuing operations before income taxes (2,632,162 ) (2,035,156 ) (101 ) 2,035,313 (2,632,106 ) Provision for (benefit from) income taxes (351,388 ) — 56 — (351,332 ) Net income (loss) $ (2,280,774 ) $ (2,035,156 ) $ (157 ) $ 2,035,313 $ (2,280,774 ) Total comprehensive income (loss) $ (2,278,048 ) $ (2,033,102 ) $ (157 ) $ 2,033,259 $ (2,278,048 ) Condensed Consolidating Statements of Operations Nine Months Ended September 30, 2014 Parent/Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Consolidated (In thousands) Revenues $ — $ 2,191,927 $ — $ — $ 2,191,927 Costs, expenses and other Cost of sales (exclusive of items shown separately below) 9,378 1,948,918 — (2,749 ) 1,955,547 Depreciation, depletion and amortization 3,993 308,022 27 — 312,042 Amortization of acquired sales contracts, net — (9,948 ) — — (9,948 ) Change in fair value of coal derivatives and coal trading activities, net — (5,811 ) — — (5,811 ) Asset impairment and mine closure costs 1,512 5,060 — — 6,572 Selling, general and administrative expenses 61,216 22,540 4,971 (1,524 ) 87,203 Other operating (income) expense, net 1,272 (10,869 ) (4,127 ) 4,273 (9,451 ) 77,371 2,257,912 871 — 2,336,154 Loss from investment in subsidiaries (30,839 ) — — 30,839 — Loss from operations (108,210 ) (65,985 ) (871 ) 30,839 (144,227 ) Interest expense, net Interest expense (346,481 ) (19,466 ) (3,258 ) 76,557 (292,648 ) Interest and investment income 23,598 54,979 3,808 (76,557 ) 5,828 (322,883 ) 35,513 550 — (286,820 ) Loss from continuing operations before income taxes (431,093 ) (30,472 ) (321 ) 30,839 (431,047 ) Provision for (benefit from) income taxes (112,876 ) — 46 — (112,830 ) Net loss $ (318,217 ) $ (30,472 ) $ (367 ) $ 30,839 $ (318,217 ) Total comprehensive loss $ (324,403 ) $ (33,062 ) $ (367 ) $ 33,429 $ (324,403 ) Condensed Consolidating Balance Sheets September 30, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Assets Cash and cash equivalents $ 362,643 $ 120,484 $ 11,661 $ — $ 494,788 Short term investments 199,731 — — — 199,731 Restricted cash — — 50,409 — 50,409 Receivables 14,307 12,502 216,959 (4,359 ) 239,409 Inventories — 239,035 — — 239,035 Other 50,449 44,565 933 — 95,947 Total current assets 627,130 416,586 279,962 (4,359 ) 1,319,319 Property, plant and equipment, net 8,447 4,164,189 — 402 4,173,038 Investment in subsidiaries 5,421,088 — — (5,421,088 ) — Intercompany receivables — 2,225,149 — (2,225,149 ) — Note receivable from Arch Western 675,000 — — (675,000 ) — Other 99,939 254,712 989 — 355,640 Total other assets 6,196,027 2,479,861 989 (8,321,237 ) 355,640 Total assets $ 6,831,604 $ 7,060,636 $ 280,951 $ (8,325,194 ) $ 5,847,997 Liabilities and Stockholders’ Equity Accounts payable $ 13,566 $ 138,624 $ 39 $ — $ 152,229 Accrued expenses and other current liabilities 118,662 195,577 867 (4,359 ) 310,747 Current maturities of debt 21,810 10,427 — — 32,237 Total current liabilities 154,038 344,628 906 (4,359 ) 495,213 Long-term debt 5,074,812 33,680 — — 5,108,492 Intercompany payables 1,971,290 — 253,859 (2,225,149 ) — Note payable to Arch Coal — 675,000 — (675,000 ) — Asset retirement obligations 1,037 413,157 — — 414,194 Accrued pension benefits 4,247 7,814 — — 12,061 Accrued postretirement benefits other than pension 4,234 29,732 — — 33,966 Accrued workers’ compensation 10,291 85,614 — — 95,905 Deferred income taxes 44,806 — — — 44,806 Other noncurrent liabilities 172,691 75,810 299 — 248,800 Total liabilities 7,437,446 1,665,435 255,064 (2,904,508 ) 6,453,437 Stockholders’ equity (605,842 ) 5,395,201 25,887 (5,420,686 ) (605,440 ) Total liabilities and stockholders’ equity $ 6,831,604 $ 7,060,636 $ 280,951 $ (8,325,194 ) $ 5,847,997 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 Nine Months Ended September 30, 2015 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (353,386 ) $ 279,503 $ (5,799 ) $ — $ (79,682 ) Investing Activities Capital expenditures (956 ) (108,294 ) — — (109,250 ) Additions to prepaid royalties — (5,808 ) — — (5,808 ) Proceeds from disposals and divestitures — 1,020 — — 1,020 Purchases of marketable securities (203,094 ) — — — (203,094 ) Proceeds from sale or maturity of marketable securities and other investments 248,362 — — — 248,362 Investments in and advances to affiliates (788 ) (7,156 ) — — (7,944 ) Cash used in investing activities 43,524 (120,238 ) — — (76,714 ) Financing Activities Payments on term loan (14,625 ) — — — (14,625 ) Net payments on other debt (5,814 ) (6,378 ) — — (12,192 ) Expenses related to debt restructuring (11,498 ) — — — (11,498 ) Deposits of restricted cash — — (44,732 ) — (44,732 ) Transactions with affiliates, net 132,257 (182,761 ) 50,504 — — Cash provided by (used in) financing activities 100,320 (189,139 ) 5,772 — (83,047 ) Decrease in cash and cash equivalents (209,542 ) (29,874 ) (27 ) — (239,443 ) Cash and cash equivalents, beginning of period 572,185 150,358 11,688 — 734,231 Cash and cash equivalents, end of period $ 362,643 $ 120,484 $ 11,661 $ — $ 494,788 Condensed Consolidating Statements of Cash Flows Nine Months Ended September 30, 2014 Parent/Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated (In thousands) Cash provided by (used in) operating activities $ (342,497 ) $ 360,036 $ (15,549 ) $ — $ 1,990 Investing Activities Capital expenditures (1,195 ) (117,506 ) — — (118,701 ) Additions to prepaid royalties — (3,604 ) — — (3,604 ) Proceeds from disposals and divestitures 46,634 4,337 — — 50,971 Purchases of short term investments (181,546 ) — — — (181,546 ) Proceeds from sales of short term investments 178,293 — — — 178,293 Investments in and advances to affiliates (2,047 ) (11,346 ) — — (13,393 ) Cash provided by (used in) investing activities 40,139 (128,119 ) — — (87,980 ) Financing Activities — Payments on term loan (14,625 ) — — — (14,625 ) Debt financing costs (2,219 ) — — — (2,219 ) Net payments on other debt (6,814 ) (3,373 ) — — (10,187 ) Dividends paid (2,123 ) — — — (2,123 ) Change in restricted cash — — (6 ) — (6 ) Other (15 ) — — — (15 ) Transactions with affiliates, net 162,643 (178,603 ) 15,960 — — Cash provided by (used in) financing activities 136,847 (181,976 ) 15,954 — (29,175 ) Increase (decrease) in cash and cash equivalents (165,511 ) 49,941 405 — (115,165 ) Cash and cash equivalents, beginning of period 799,333 100,418 11,348 — 911,099 Cash and cash equivalents, end of period $ 633,822 $ 150,359 $ 11,753 $ — $ 795,934 |